Collecting Delinquent Dues

Started by SusanF11 • 7 replies • 837 views

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SusanF11 (Georgia)
Posts: 1

Posted:

We are a new self-managed HOA in Georgia, only 22 homes w/ yearly dues of $300.00.
We operate on a very tight budget and have collected dues from 21 homeowners. We have one homeowner that owes dues for two years. Our previous management company did nothing to collect the dues but send a letter, which did not work. He received a final notice of past due account on 2/1, with no response. We do not have the funds to hire an attorney to file a lien. Any ideas on how to handle this situation? Willing to try anything that isn't too costly.

GeorgeS21 (Florida)
Posts: 3,808

Posted:

Lots of background missing wrt your docs, but short course is to increase dues, or call for a special assessment to allow you to hire an attorney. If you can’t afford an attorney and won’t file the lien yourself, your HOA will be prey for deadbeat owners.

My advice - learn how to lien the property.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Sus

In SC we do not need a lawyer to file a lien. Any Officer of the Corporation can do such for a small filing fee ($50??)

LetA (Nevada)
Posts: 2,679

Posted:

That's kind of scary that you don't have any kind of reserves or operating expense to hire an attorney. My advice would to visit your local legal aid society. Start there, perhaps reach out to your ombudsman or agency that helps HOA's and owners. You need to get a lien filed and better hope they're not in the process of filing BK.

RichardP13 (California)
Posts: 3,868

Posted:

Quote:

Posted By LetA on 03/09/2019 9:41 PM
That's kind of scary that you don't have any kind of reserves or operating expense to hire an attorney. My advice would to visit your local legal aid society. Start there, perhaps reach out to your ombudsman or agency that helps HOA's and owners. You need to get a lien filed and better hope they're not in the process of filing BK.

Not a lot that can be done when you only collect less than $6600.00 annually.

MarkM19 (Texas)
Posts: 1,459

Posted:

Susan
Your dues seems pretty low but we do not know what it covers. Not sure what the law is in your state is for raising the dues but I would think a 10% increase so that a reserve fund could be put in place and a budget item for legal fees setup. This is 2 different issues. Legal fees are not a reserve item it is expense item.

Your post mentions that you are newly Self Managed and you mention your prior MC. If this is the case you must be saving money that is not going to the old MC. I am sure that was at least 10 to 15% of your budget.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

If you have an MC, they may have an attorney you can use. We used our Bookkeeper's whenever filing liens. It may be something you can add to pay for the MC's services.

When you file a lien, the legal expenses spent are part of the lien. So when they pay the lien you get the legal expenses back. You can use a legal service to file a lien. They only cost a few hundred dollars maybe. A lien is around $400 ish I think. Depends on your area etc...

We also have an established payment rule. 6 months we lien, 1 year we CONSIDER foreclosure. That is our policy because at 6 months it is break even point for expense to file a lien. 1 year CONSIDER foreclosure is by that time the bank is probably already foreclosing. We don't need to. Besides foreclosure is a STOP the bleeding method. NOT a profit making.

NEVER SUE to get the dues. That will end up worse for you. A lawsuit is a court judgement with not as much teeth as a lien does. Remember can only collect back dues owed on liens/foreclosures. So make sure to keep good records.

Former HOA President

KellyM3 (North Carolina)
Posts: 2,239

Posted:

Consult w/ a collections attorney that handles HOA collections. HOA collections actions are not like a credit card in default or other consumer credit. Many states allow HOAs to roll the cost of legal fees into the debt owed as part of the collections process.

You can't operate your HOA organization on the cheap in these cases; your organization will bleed dry.

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