Collections Attorney arrangement- Is this normal?

We have a condo in Maryland.. I have only been on the board for 2 years but I pretty much do everything myself and the other board members don't pay any attention to what is going on..
Here is the current/broken process.
When an owner gets 30 days behind in payments our management company sends them a 15 day notice to pay..
Then if they don't pay they send them 2nd 15 day notice. Then if they don't pay by that 15 days they turn them over to a collection attorney.

This is when it gets bad.
The collection attorney opens a case and instantly charges the association $250-$400 just for opening a file and sending a letter.
They then start having phone conversations with the owner and running title searches and writing letters to the owner. All the time charging the association by the hour. When the owner tries to bring their account current they have $700-$1000 in attorney fees for just minimal work on the attorneys side. Many times doubling the amount needed to catch up their back payments.
Well then the attorney sets them up on a "Payment plan" where they pay their back due amount over time..
Well the issue is that in addition to charge all the attorney fees they are charging the assoication a 30% collections fee.
Not just on the Back balance but on any Regular (Future) payments of the owners condo fees until the owner is paid in full.
The association is loosing a fortune.
Look at this particular situation.
Owner monthly condo fee is $600 and he got behind 3 months and owed $1800.. in June 2018
Management company sent his account to the attorney.
Attorney added about $1000 in attorney (Charged to association up front) to his account.
They then set him up on a payment plan to pay $200 of his back balance monthly in addition to his $600 monthly condo fee.
This has been going on for the last 2 years.. All the while the attorney is reviewing the file monthly and talking to the owner on the phone charging more attorney fees.
They are taking 30% of not only the $200 in back pay but 30% of his regular $600 payment and 30% of their attorney fees they will eventually collect.

So, in June 2018 he owed $1800 in back condo fees when being sent to the attorney.
The owner has been paying $800 a month for 2 years. for a total of $1,9200 of which the attorney has taken $5,760 in collection fees in addition to their attorney fees.
With the added attorney fees the owner still owes about the same as 2 years ago on his balance
The association is out $2000 =/- in attorney fees and $5760 in attorney collection fees.
Had we not sent the owner to the collection attorney the association would have saved about $6000
IS THIS NORMAL?

For the record most of the units in our building bought at the peak of the market in 2017 and owe more on their mortgages than the units are worth so foreclosing on a lien is not a good option for the association.

So, the purpose of the fees and interest is to motivate those not paying their share, to pay their fair share - on time, and consistently.

Our HOAs in Florida follow much the same process as the OP noted, adding an advance notice with each billing about what will occur if not paid on time, then multiple warnings about non payment, then the account is turned over to an attorney for collection. ALL charges following turnover to the attorney are payable by the owner in arrears. NONE are payable by the Association. Think of the logic path - why would the Association pay for fees to collect a bad debt?

Am I saying this correctly?

I don't understand - the fees are charged to the COA/HOA at point of transaction per contract with attorney, but all fees and interest are collected from the owners in arrears - one way to the other.

Sure, the law firm should be charging market rate for this sort of stuff, but, in the end the property owner pays, not the COA/HOA.

At best, with late charges and some attorney fees, we might break even. However, we often lose money.

To minimize this, I gave very specific instructions to the attorney.
I instruct that no payment plan can be approved without the approval of the Board.
I instruct no updates unless something actually changes (they would give us monthly updates and charge $300 that was not considered part of the collections efforts).
I instructed that all attorney fees were to be charged to the account - including removing liens, court costs, etc.

This minimized our losses and, at one point, we actually broke even.

Chris,

We have one member in our development who is constantly requiring us to take them to court.
They pay more then they would have to if they simply paid the assessment on time.
However, this seems to be a yearly event.

They simply refuse to respond to any of the HOA letters.
They will respond to legal action taking them to court for a judgement.

This seems to be their way of living.

We were actually going to foreclose at one point and then a new board came in and didn't want to foreclose on those they called neighbors. So, the cycle continues. Send late notices, escalate to legal action, payment plan is agreed to, payment plan is paid off. Then they quit paying assessments, sent late notices, escalate to legal action, etc. etc. etc.

There is a big difference you paying $20.00 a month in Bama and paying $600 a month elsewhere.

What does that mean JohnC77? Simple math. Everyone's dues are different all over the United states. So a break even for covering the expenses of filing a lien will be different for every HOA. Our dues were low and thus took longer to get to the break even point. Another HOA the dues could be higher and thus 2 months may be a good break even point.

I am just using ours as example. Which BTW: Many HOA's dues around here are usually much higher. I turned down a condo on the river because dues were $500 - $600 a month for a 1 bedroom. It did come with gym/pool/dock access. It was just summer use.

I hope this wasn't intended for me. You should see the colorful metaphor I bestow upon Donald Trump on his Twitter page. They are meant to be

Merry Christmas