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Started by KP3 • 11 replies • 702 views

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KP3 (Texas)
Posts: 124

Posted:

Can a mgmt company go back to 2015 and collect fees that they didn’t collect then until now? Evidently a HO owed past due fees that the mgmt company could collect but didn’t for whatever reason and since the homeowner has paid all they owe, mgmt charged the association for all the back fees. Is this even legal?

TimB4 (Tennessee)
Posts: 21,059

Posted:

Need to read the management contract.

KP3 (Texas)
Posts: 124

Posted:

Quote:

Posted By TimB4 on 08/16/2018 6:45 PM
Need to read the management contract.

We know they can collect “collection fees” but the question is, can they go back and collect NOW from 2015, 2016 & 2017 if they didn’t collect them in those years?
Those years have been closed have they not?

JaredC (Texas)
Posts: 264

Posted:

Yup that's a contract question since it's between the HOA and the mgmt company. Personally I think it's a shady move on part of the MGMT company because it was their mistake to begin with. Going back three years is a bit much. From a business perspective I'd try to negotiate them only going back a year and/or consider firing them and hiring a new company.

KP3 (Texas)
Posts: 124

Posted:

Quote:

Posted By JaredC on 08/17/2018 8:27 AM
Yup that's a contract question since it's between the HOA and the mgmt company. Personally I think it's a shady move on part of the MGMT company because it was their mistake to begin with. Going back three years is a bit much. From a business perspective I'd try to negotiate them only going back a year and/or consider firing them and hiring a new company.

The board has already decided on a new mgmt company and are waiting on the language to be analyzed for the formal termination letter. I think they know and that’s why they are doing this. But what can we do?

JaredC (Texas)
Posts: 264

Posted:

So if you fire them then negotiations will go south. Depending on the language in the contract and the amount they claim the HOA owes they could very well choose to sue in which case you guys would need to hire an attorney. Keep in mind though that suing people is expensive due to attorneys fees, filing fees, etc and that makes the whole affair a business decision for both parties involved. At this point I'd pull out the contract, distribute it to all the board members and after you all read it have a pow wow regarding your options that considers your potential liability.

RichardP13 (California)
Posts: 3,868

Posted:

Quote:

Posted By KP3 on 08/16/2018 5:32 PM
Can a mgmt company go back to 2015 and collect fees that they didn’t collect then until now? Evidently a HO owed past due fees that the mgmt company could collect but didn’t for whatever reason and since the homeowner has paid all they owe, mgmt charged the association for all the back fees. Is this even legal?

No, once the account was brought current and no additional fees were attached, you can't add after the fact.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Richard,

I think the issue is, correct me if I'm wrong KP, the member was delinquent for several years.
The Board agreed to a payment plan, perhaps waiving some of the fees.
However, the contract specifies that the MC receives x fees for x work on the delinquent account.

Now that the member has brought the account current, there wasn't enough in the late charges to cover the MC fees. Hence, the MC is billing the Association for the difference.

I see this, as has happened to our Association several times, agreeing to a payoff amount but failure to include all the legal fees for managing the payoff and closing the file. Therefore, the Association was responsible for the difference.

RichardP13 (California)
Posts: 3,868

Posted:

Quote:

Posted By TimB4 on 08/17/2018 2:05 PM
Richard,

I think the issue is, correct me if I'm wrong KP, the member was delinquent for several years.
The Board agreed to a payment plan, perhaps waiving some of the fees.
However, the contract specifies that the MC receives x fees for x work on the delinquent account.

Now that the member has brought the account current, there wasn't enough in the late charges to cover the MC fees. Hence, the MC is billing the Association for the difference.

I see this, as has happened to our Association several times, agreeing to a payoff amount but failure to include all the legal fees for managing the payoff and closing the file. Therefore, the Association was responsible for the difference.

I have had this happen and the party trying to get the late fees lost in court. They should have been added to the account in the same month as the occured.

My contract states I collect on the late fees, but then I do all the work. It is only payable once the homeowner pays. So it is zero out the of the HOA pocket. This does for late fees, pre-liens, small claims and liens.

KP3 (Texas)
Posts: 124

Posted:

The account was delinquent and there was no payment plan. The association was in debt for a couple of years because the declarant quit funding. When the new homeowner board took over, collections were a top priority. A builder finally started developing the remaining land and in turn the association began collecting dues from those lots platted thus giving us the needed funding. The association filed a lien on that particular account and the homeowner became current. There was only one demand letter sent in those years and the management company collected all their late fees from 2015 forward just recently. Those years had been closed financially so how does that affect those years? And can they do that? Should they have given theboard a heads up? The management company has since collected all of their management fees from the time there was no funding..

JenniferG11 (Texas)
Posts: 667

Posted:

*question*

I thought late fees were collected on behalf of the association, not the MC. Ours can waive late fees and interest if they want to. The by-laws say if a member writes a letter to the board explaining a hardship, it can vote to remove/reduce late fees and interest.

RichardP13 (California)
Posts: 3,868

Posted:

Quote:

Posted By KP3 on 08/19/2018 6:59 AM
The account was delinquent and there was no payment plan. The association was in debt for a couple of years because the declarant quit funding. When the new homeowner board took over, collections were a top priority. A builder finally started developing the remaining land and in turn the association began collecting dues from those lots platted thus giving us the needed funding. The association filed a lien on that particular account and the homeowner became current. There was only one demand letter sent in those years and the management company collected all their late fees from 2015 forward just recently. Those years had been closed financially so how does that affect those years? And can they do that? Should they have given theboard a heads up? The management company has since collected all of their management fees from the time there was no funding..

Was the homeowner billed late fees all these months, and the MC is now collecting because the homeowner paid?

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