How best to handle the situation. Member pays HOA while under collection.

We have a 17 member Association and one member has a lien against his property for unpaid assessments spanning multiple years. The Association's attorney has been handling collections as a last-ditch effort. Neighbor "X" therefore has back assessments, incurred interest, attorney fees, etc.

Along with this year's notice of the Annual Meeting a friendly reminder message was sent to notify all members of assessments (paid annually) being due. Neighbor "X" sent a check made out to the Association in the amount of the current year's dues. The board was told (by the attorney) that if any payments were received they must first go toward interest and attorney fees before touching the oldest principal. Is there somewhere that clearly states this procedure so I can explain it to the homeowner? I've looked through the governing documents and the Florida statutes and have yet to find anything.

My thoughts were to talk to the homeowner aside at the Annual Meeting and tell him to submit payments through the attorney. That seems the easiest thing to do, but I don't want to sound harsh toward a member who is at least making an attempt to pay. What would be the best/proper way to handle the situation?

Robert

You ask: Is there somewhere that clearly states this procedure so I can explain it to the homeowner? I've looked through the governing documents and the Florida statutes and have yet to find anything.

I expect the answer is in any agreement your association has with the attorney. Meaning the association had turned over the collection to the attorney.

We have, in fact the board offered to waive all interest to settle if paid in full and the homeowner did not take the offer (or could not) which was unfortunate. As a board member, I wouldn't mind making the offer again, if a majority of the board members agreed and if it is legal. The attorney fees are mostly fees from letters, securing a lien, and the costs of removing the lien. The total balance is roughly $2500, with attorney fees at $550, and $750 in interest.

Hi Robert
My Brother and sister-in-law live in Florida and she is on the board for their Association. They have a member that stop paying dues and became in arrears to a good amount. They tried working with the member but the member paid whenever and stopped paying again. So the went to court and set up a payment plan to pay the arrears. Had trouble paying again and went back to court to and set up a new payment plan. So all in all the member pays current dues and pays a set amount with every payment to pay the arrears. Seems Lawyer want to keep the money rolling in this isn't good for the Association and especially for the member. You say you pay dues just once a year? If so just except current dues and set up a monthly payment plan to pay the arrears. As long as the member pays as planned stop the interest and Attorney fees, just take the total arrears amount and divide by say 60 months and hope the member can pay and put this behind both of you. Seems like the Lawyer would bury this member with fees and interest. So far the deal that my sister-in-law made with their member is working well for going on two years.

I would expect anyone that is or has been on a board should know the answer to this question.

For example in California, we have a payment priority schedule outlined in Civil Code.

(a) Any payments made by the owner of a separate interest toward a debt described in subdivision (a) of Section 5650 shall first be applied to the assessments owed, and, only after the assessments owed are paid in full shall the payments be applied to the fees and costs of collection, attorney’s fees, late charges, or interest.

Robert,

One option to help those who may have problems budgeting is to consider monthly payments for the annual assessment.

In my Association, the assessment is due on Jan 1. However, members may pay monthly. If they fail to pay on time and fall 90 days behind, the full amount becomes due and payable. This amount is then sent to collections after 120 days late.