Consequences of HOA violations of the Fair Debt Collection Practices Act

PaulJ6
Posts: 990

Posted:

I see that when HOAs use lawyers to collect assessments and other debts that are allegedly owed to the HOA, the lawyer is considered a "debt collector" under the Fair Debt Collection Practices Act and is subject to a range of restrictions governing his or her conduct.

An overview is at https://www.hoaleader.com/public/What-HOA-Board-Members-Need-Know-About-FDCPA.cfm

For example, a lawyer who collects alleged debts for a HOA can't contact anyone who the lawyer knows has his or her own lawyer; can't keep contacting someone who asks not to be contacted; and has to include various disclaimers in the lawyer's first communication to the alleged debtor. If the lawyer violates the FDCPA, the alleged debtor can recover damages and attorneys' fees.

These restrictions generally also apply to other parties who a HOA uses to collect its alleged debts, although management companies might not be included. State laws may include harsher restrictions.

In real life, has anyone seen an owner fight back against a HOA or its counsel and claim violations of the Fair Debt Collection Practices Act? If so, what happened: did the HOA or its counsel back down?

I'm a lawyer so I know what the law is; I'm just looking for real-life examples of what happened when a HOA went after someone and the person then claimed in response that the HOA's lawyer or other debt collector violated the FDCPA.

Thanks.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

We didn't have anyone claim against Fair Debt collection. We never required to provide a social security number. It's not required. Our collection practices were liens or foreclosures for unpaid dues.

We did do a foreclosure. The lawyer handled it all for us. Remember they tried to "fight" it by hiring multiple lawyers. Stiffing them. It ended up in court because their tenant sued them while the foreclosure process was going on. There was a rent to own agreement between tenant/owner the owner defaulted on. Plus tried to make them pay the back dues for the foreclosure.

It was a quite a mess but the tenant won. I had to go to court to testify on the HOA's behalf. Had to point out what our responsibilities were and what dues covered. Plus give the court the records of the foreclosure we did.

Not sure if Fair Debt Collections Act fall into the HOA universe. HOA is given the right to lien/foreclose for unpaid due (or work done) in their documentation. If it's not valid, then that should be part of the process to object.

Former HOA President

MarkW18
Posts: 1,290

Posted:

Quote:

Posted By MelissaP1 on 06/30/2019 3:15 PM
We didn't have anyone claim against Fair Debt collection. We never required to provide a social security number. It's not required. Our collection practices were liens or foreclosures for unpaid dues.

We did do a foreclosure. The lawyer handled it all for us. Remember they tried to "fight" it by hiring multiple lawyers. Stiffing them. It ended up in court because their tenant sued them while the foreclosure process was going on. There was a rent to own agreement between tenant/owner the owner defaulted on. Plus tried to make them pay the back dues for the foreclosure.

It was a quite a mess but the tenant won. I had to go to court to testify on the HOA's behalf. Had to point out what our responsibilities were and what dues covered. Plus give the court the records of the foreclosure we did.

Not sure if Fair Debt Collections Act fall into the HOA universe. HOA is given the right to lien/foreclose for unpaid due (or work done) in their documentation. If it's not valid, then that should be part of the process to object.

HOA's have to abide by the Fair Debt Collections Act.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By MarkW18 on 06/30/2019 3:26 PM

Posted By MelissaP1 on 06/30/2019 3:15 PM
We didn't have anyone claim against Fair Debt collection. We never required to provide a social security number. It's not required. Our collection practices were liens or foreclosures for unpaid dues.

We did do a foreclosure. The lawyer handled it all for us. Remember they tried to "fight" it by hiring multiple lawyers. Stiffing them. It ended up in court because their tenant sued them while the foreclosure process was going on. There was a rent to own agreement between tenant/owner the owner defaulted on. Plus tried to make them pay the back dues for the foreclosure.

It was a quite a mess but the tenant won. I had to go to court to testify on the HOA's behalf. Had to point out what our responsibilities were and what dues covered. Plus give the court the records of the foreclosure we did.

Not sure if Fair Debt Collections Act fall into the HOA universe. HOA is given the right to lien/foreclose for unpaid due (or work done) in their documentation. If it's not valid, then that should be part of the process to object.

HOA's have to abide by the Fair Debt Collections Act.

There is something lingering in my mind that says this is not true. Due to one agreeing to the docs changes this. I do not know enough to go any further. MAybe others will chime in.

We use our HOA Attorney who has one of the largest HOA focused practices in SC. He has a debt collection division that does such so we (the BOD) have never had to address are we doing it wrong.

MarkW18
Posts: 1,290

Posted:

Quote:

Posted By JohnC46 on 06/30/2019 4:32 PM

Posted By MarkW18 on 06/30/2019 3:26 PM

Posted By MelissaP1 on 06/30/2019 3:15 PM
We didn't have anyone claim against Fair Debt collection. We never required to provide a social security number. It's not required. Our collection practices were liens or foreclosures for unpaid dues.

We did do a foreclosure. The lawyer handled it all for us. Remember they tried to "fight" it by hiring multiple lawyers. Stiffing them. It ended up in court because their tenant sued them while the foreclosure process was going on. There was a rent to own agreement between tenant/owner the owner defaulted on. Plus tried to make them pay the back dues for the foreclosure.

It was a quite a mess but the tenant won. I had to go to court to testify on the HOA's behalf. Had to point out what our responsibilities were and what dues covered. Plus give the court the records of the foreclosure we did.

Not sure if Fair Debt Collections Act fall into the HOA universe. HOA is given the right to lien/foreclose for unpaid due (or work done) in their documentation. If it's not valid, then that should be part of the process to object.

HOA's have to abide by the Fair Debt Collections Act.

There is something lingering in my mind that says this is not true. Due to one agreeing to the docs changes this. I do not know enough to go any further. MAybe others will chime in.

We use our HOA Attorney who has one of the largest HOA focused practices in SC. He has a debt collection division that does such so we (the BOD) have never had to address are we doing it wrong.

This is just one link. I am sure with the right search phrase, you could many others.

https://www.hopb.co/blog/abusive-hoa-debt-collection-practices-fdcpa

NpS (Pennsylvania)
Posts: 4,216

Posted:

We got a FDCPA threat once from a homeowner's lawyer.

MC#1 messed up the billing on nearly half of our accounts. The most common error was issuing double credits on certain types of transactions. Also very long delays in sending monthly reports to the BOD. So the HOA was flying blind. We fired MC#1 and hired MC#2. MC#2 dug through every account, made corrections, and sent revised statements to all incorrect accounts. After around 3 months, everyone got straightened out except for the owner whose lawyer sent the FDCPA threat letter.

Since we never turned the account over to collections, we were comfortable that both the HOA and the MC were exempt from claims under the FDCPA.

The lawyer's argument was that the HOA's agent (MC#1) had issued the credits and the HOA should be accountable for the actions of MC#1. By trying to collect on a debt that MC#1 said didn't exist, MC#2 was violating the FDCPA according to the lawyer.

Our answer was that, in addition to the fact that no debt collector was involved, we rejected his assertion that the homeowner was a mere debtor. To our way of thinking, the homeowner was also a member-owner of the HOA and just as responsible as any other owner for the screwups of MC#1.

We also challenged the lawyer for trying to intimidate the BOD with his BS claim of an FDCPA violation. He pushed back but our HOA held firm. He never filed a claim - I think he was just trying to take advantage of the lack of understanding among our BOD members.

Sikubali jukumu. Read all posts at your own risk.

SheliaH (Indiana)
Posts: 6,964

Posted:

Fortunately, we haven't had any problems in this area. Our current attorney came from a family that ran a debt collection agency and he specialized in the area before joining the law firm. I worked with him while he was in law school (when we both worked in consumer protection), and his background is precisely why I suggested to the board that we consider hiring his firm. He was familiar with the law and know how to conduct himself so we wouldn't get into trouble (and he wouldn't get in trouble with the bar association.)

I was treasurer of my HOA board for 5 years and I know it's easy to resort to not-so-ethical practices to try and collect money, especially when there are homeowners who duck and swerve better than an MMA fighter or the late, great Ali in his heyday. However, I made an effort to control myself because I didn't want a judge or someone else to say that's illegal and smack the Association in the wallet.

That's why I've been saying for years that HOAs need to comply with the FDCP or at least hire debt collectors that would. It's also why I don't agree with publishing lists of delinquent homeowners. I know some associations have done this, but in all the years I've posted on this board, I've yet to come across ANYONE who said this practice resulted in collecting a debt or reducing delinquencies. We live in a society where people find it really easy to say one thing, think another and do something else, so the old idea of one's word reflecting who you are is - old. Today, I incur tons of debt in credit cards, for example, instead of working out a payment plan, I can go to one of these places that promise to reduce my bill because they "know secrets the credit card companies don't want you to know" (you've heard those commercials

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

JZ2 (Florida)
Posts: 52

Posted:

Unfortunately, it happens more often than you would think.

Some attorneys are inclined to throw some money at the complainant simply to get rid of the matter. In my judgment, that sends the wrong message and may well invite other such claims or suits.

The best advice I would give an attorney who has been sued for purported FDCPA violations is to defend the case vigorously.

Of course, that assumes that the attorney hasn't violated the Act... ;-)

JohnC46 (South Carolina)
Posts: 14,265

Posted:

It seems to be coming back to me. That if an association tries to directly elect a debt from an owner (no 3rd party) they are not subject to FDCPA.

I believe the association can also use their MC to collect debts as long as the MC is not directly paid to do so.

This is coming from memory. I am not stating fact.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By JohnC46 on 07/03/2019 2:36 PM
It seems to be coming back to me. That if an association tries to directly elect a debt from an owner (no 3rd party) they are not subject to FDCPA.

I believe the association can also use their MC to collect debts as long as the MC is not directly paid to do so.

This is coming from memory. I am not stating fact.

Yes. HOA and MC are exempt.
Lawyer liability - depends on the circumstance.
Homeowner as consumer - depends on the jurisdiction.

Many aspects of FDCPA not settled on a national basis. Anyone who wants to spend someone else's money on this stuff can ride it out nicely.

Sikubali jukumu. Read all posts at your own risk.