Liens with no notice.

Started by DennisG7 • 11 replies • 421 views

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DennisG7 (Georgia)
Posts: 155

Posted:

In the past 3-4 months there have been 14 liens placed on homes in our HOA. (I'm not on that list) What has been discovered are a couple of important issues.
1. I have spoken with 4 of the homeowners and none of them said they were notified of a lien being filed.
2. A number of the liens are in the $220-$440 range. The Managment company appears to be doing this and charging the HOA $500 per filing it, that's a single page filed at the court house via efile. I think the fee is $25. The mangement company has thus far charged $7000 for legal collection filings thru July 31.
3.There appears to be ZERO knowledge from the BOD that these leins are bring filed. When asked about htem they gave us a blank look.
4. There is no mention in any HOA document/minutes that are available to members that indicates the BOD approved and authorized the liens being filed.

I'm wondering if a mangement company can file and charge the HOA for liens without knowledge and some sort of written approval?
Dennisg7

AugustinD
Posts: 3,698

Posted:

-- What do your Bylaws and CC&Rs say about placing liens on owners' homes when the owners are in arrears for payment of HOA assessments?

-- It is possible that what the Bylaws and CCRs say about liens is legal notice all by itself. On the other hand, this may not be best practices, especially given what the management company is billing vs. the amount the owner is in arrears.

-- I imagine the governing documents state that the HOA has the right to recover from the owner the $500 per line the management company is charging. Not that this justifies this high charge by the management company. What the MC is doing sounds like quite the racket.

-- What, if anything, does the HOA's contract with the management company say about these billings for liens filed?

MaxB4
Posts: 3,513

Posted:

An assessment become a lien, once it is billed and becomes dues. A lien that has been recorded in now an enforcable document.

You would need to check Georgia statues on what procedures and notificiations are required prior to having a lien recorded on the property. If there are no set policy, then I guess it is fair game.

In California, we have strict procedures that have to be followed. We will do a late notice, a collection notice, then pre-lien and then lien. The act of recording a lien must be voted on in open session of a properly notice Board meeting. The minutes of those meetings are recorded with the lien.

For the record, I charge $150.00 for a pre-lien and $425.00 for a lien (includes $100.00 for lien release, once lien is paid). These fees include notary fee, real estate title report, recording fee and certfied postage. These fees are listed on the addendum of our management agreement. Some companies will only bill an HOA once the fees have been paid by the owner, but if the management agreement is ever terminated and the fees remain unpaid, then payment for these fees are accelerated.

If Georgia has no such procedures and it is an issue with you, I would be speaking with my legislators on a solution.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Action by a previous board that was sloppy about keeping minutes? Or filing liens is part of the PM's contract?

In my community homeowners are notified that the association may place a lien as part of their collection actions, and the lien follows several months of late notices and collection letters. It's not like homeowners don't know they're not paying their assessments. Liens are also recorded, so the documents are available on the county recorder's web site (it's public info) - in my state that constitutes "notice".

Georgia may have different laws.

LetA (Nevada)
Posts: 2,679

Posted:

Your Management company isn't going rogue, they are following your HOA's established assessment collection schedule. There is a procedure that's land out in your governing documents, your CC&R's, bylaws and rules and regulations. Look at your assessment, fine and collection schedule. People that are late, haven't paid etc. Many HOA's will put people in arrears on a payment plan to stop the monthly or quarterly late fess. If a payment plan fails, then many HOA's kick it to a collection agency. If a collection agency can't get their attention then the HOA has every right to advance to the next steps. one is place a lien and the other is to foreclose. All of this is spelled out in your governing documents. In the worst case scenario if you plan to foreclose, notify the bank, many states like Nevada, the bank will kick you X number of months in arrears. The key here is don't let the bleeding get out of hand.

SheliaH (Indiana)
Posts: 6,964

Posted:

What LetA said. I understand the concern if the property manager is doing something unauthorized, but where's your outrage about the people who aren't paying their fair share of assessments? When some people don't (or refuse) to pay, everyone else ends up indirectly subsidizing those homeowners because the bills are for the ENTIRE community.

These people know they owe the money - are they not capable of calling the property manager themselves or going to the board to make payment arrangements? I dealt with this crap for five years as board treasurer and when people provided verifiable proof of financial hardship such as job loss, I never objected to a payment plan, provided people complied with the terms and let us know if there were problems.

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

TimB4 (Tennessee)
Posts: 21,059

Posted:

Dennis,

It's possible that the owners you spoke to simply didn't read the late notices (expecting that they were sent) that likely said something along the lines if not paid a lien would be filed.

That said, I believe that the board should be involved in saying when a lien should be filed. However, it will also depend on what the contract with the MC specifies. I'm surprised that a Treasurers report doesn't mention the status of liens - or at least, how many accounts are have a lien recorded.

Perhaps your Treasurer (or whole board) has chosen not to accept responsibility for the positions they hold and are simply allowing the MC to do everything (it does happen).

As LetA said, it's possible that the MC is simply acting within the confines of the agreement the Board entered into (but perhaps failed to read). The good news is that any contract can be modified. Perhaps you will serve on your board and be one who leads the work to modify the contract.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Dennis

Does you MC bill the people they are placing liens on and as such, that cost becomes part of the lien and if collected, paid back to the whom? That said, $500.00 is outrageous.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Dennis

In SC an Officer of the BOD can file a lien in Magistrates (Small Claims) Court for less then $100.00.

LoriM15 (Florida)
Posts: 1,009

Posted:

Quote:

Posted By SheliaH on 08/29/2021 6:48 AM
What LetA said. I understand the concern if the property manager is doing something unauthorized, but where's your outrage about the people who aren't paying their fair share of assessments? When some people don't (or refuse) to pay, everyone else ends up indirectly subsidizing those homeowners because the bills are for the ENTIRE community.

These people know they owe the money - are they not capable of calling the property manager themselves or going to the board to make payment arrangements? I dealt with this crap for five years as board treasurer and when people provided verifiable proof of financial hardship such as job loss, I never objected to a payment plan, provided people complied with the terms and let us know if there were problems.

We had a case where the homeowner had not paid their monthly fees for over a year. Our procedure is that once it gets to $1000 owed we send it to a collection agency. So they try to collect the $1000 plus late fees and add their own fees on top of that. We send certified letters before it goes to the collection agency, after the collection agency has it, and before and after the lien is filed. We give the homeowner plenty of notice.

We had a homeowner who didn't pay their fees for a 1.5 years. We asked them why they didn't pay. Their excuse was that the amount was auto-debited from their bank account and that we had changed management companies, so the auto-debit wasn't going to the new address of the new management companies. We had sent out email blasts, regular mail letters and even coupon books with the new account information - which they had completely ignored. When we asked them about all of the certified letters, the homeowner said "I don't open up certified letters. It's always bad news".

So homeowners may tell you they didn't receive notices - but it's probably not true.

That homeowner only ended up paying because they were refinancing their home and the new lender required them to. They paid as much in fees and penalties as the actual amound due in monthly fees.

KellyM3 (North Carolina)
Posts: 2,239

Posted:

First, every very delinquent HOA member will claim to not have been given notice about anything related to collection.

Second, if Dennis is on the board of directors, it's extremely bad form to be communicating with dues payers outside official communications channels between the homeowner and either the collections attorney or the Management Company.

Third, if that many liens have gone out in one community, the HOA board is most certainly behind the effort and the management is certainly not "going rogue." It makes no business sense and MCs aren't gonna unilaterally go crazy to file liens. That takes work and HOA cash, at least up front.

Fourth, if the HOA board approves a collections process and notifies the MC and attorney, then collections can proceed according to state law and a lien placement is only a little over halfway in the process.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Lori

I have seen fees and fines larger then the actual amount owed. Saw one with $2K in dues owed, $2.5K in fines and fees for a total owed of $4.5K of which the association got $3K.

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