are collection agencies successful in getting past HOA dues?

JustinT5 (Alabama)
Posts: 50

Posted:

Just read an article about HOA's using credit collection agencies to get past dues instead of doing leins and foreclosures. Are these types of collection agencies worthwhile to pursue? I cant' think of any downsides.
news article below:

http://cltdevelopment.blogspot.com/2013/02/homeowners-association-gets-creative.html

MaxB4
Posts: 3,513

Posted:

Download is the cost to retrieve those dues. Collection agencies are looking for a 50% payoff. A lien, if recorded will insure full payments as long as the property doesn't go into foreclosure and then all bets are off.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

It also should be noted that HOA's should NOT have access to your social security number. If you gave yours to your HOA, that is all on you. They have no need to access or view my credit ever. If I don't pay my dues, they can lien or foreclose on me. Otherwise do not even think about my credit.

Lawsuits are the worst way to pursue collections. Next would be hiring a collection agency. Both cost money and not guaranteed to see any of it.

Former HOA President

JustinT5 (Alabama)
Posts: 50

Posted:

Quote:

Posted By MelissaP1 on 05/20/2022 4:30 PM
It also should be noted that HOA's should NOT have access to your social security number. If you gave yours to your HOA, that is all on you. They have no need to access or view my credit ever. If I don't pay my dues, they can lien or foreclose on me. Otherwise do not even think about my credit.

Lawsuits are the worst way to pursue collections. Next would be hiring a collection agency. Both cost money and not guaranteed to see any of it.

OK, then what is best way to pursue collections? I was thinking of putting a sign at the front of the neighborhood with those with past dues. just like government does when you dont' pay your taxes in the newspaper.

PatJ1 (North Carolina)
Posts: 568

Posted:

We are in North Carolina and turn our collection accounts over to our attorney. 15 day demand letter, lien, and then foreclosure. Our attorney adds their fees to the amount collected from the HO and remits the dues balance to us when they pay.

Owner dues accounts are covered under privacy laws in NC. Not sure about your state. Check before you shaming late HO's.

JustinT5 (Alabama)
Posts: 50

Posted:

Quote:

Posted By PatJ1 on 05/20/2022 4:59 PM
We are in North Carolina and turn our collection accounts over to our attorney. 15 day demand letter, lien, and then foreclosure. Our attorney adds their fees to the amount collected from the HO and remits the dues balance to us when they pay.

Owner dues accounts are covered under privacy laws in NC. Not sure about your state. Check before you shaming late HO's.

how much does the attourney charge for a lien? for a foreclosure?

PatJ1 (North Carolina)
Posts: 568

Posted:

Quote:

Posted By JustinT5 on 05/20/2022 5:11 PM

Posted By PatJ1 on 05/20/2022 4:59 PM
We are in North Carolina and turn our collection accounts over to our attorney. 15 day demand letter, lien, and then foreclosure. Our attorney adds their fees to the amount collected from the HO and remits the dues balance to us when they pay.

Owner dues accounts are covered under privacy laws in NC. Not sure about your state. Check before you shaming late HO's.

how much does the attourney charge for a lien? for a foreclosure?

$185.00 - 15 day demand
$260.00 - lien filing
$600.00 - Foreclosure filing

plus other fees and filings

SheliaH (Indiana)
Posts: 6,964

Posted:

You have to ask your attorney about his/her costs, although you can call the county clerk or recorder to find out how much it'll cost to file the lien.

We considered collection agencies, but as Max stated, they usually take a huge cut of the amount due. Foreclosures can be even more expensive and usually the HOA doesn't get anything because if there's a mortgage, the bank gets paid before anyone (except for a tax lien) and often there's not enough money left to pay the HOA.

Having dealt with delinquencies for half of my 10 years on the board, the most important thing I can suggest is to have a sit down with your association attorney or a really good collection attorney who specializes in HOA collections (they're not always the same person). Take a good look at your policies and procedures to see what needs to be changed and there should be some method to the madness. Generally, foreclosure will be the last resort after everything else has failed. It will affect your budget, as you'll need a line item for bad debt (a negative number that's subtracted from association income, resulting in a more accurate number as to what you're working with).

In our community, we send homeowners a copy of the collection policy with the upcoming year's budget so everyone knows what will happen, and it's not pretty. That said, people do run into financial hardship due to job loss or major illness, so the board should consider a payment plan based on the individual circumstances and their previous payment record. In general, the more inconsistent the homeowner was in paying in full and on time, the less likely we were to offer or accept a plan, and the board had final say on that.

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

MichaelT21 (Arkansas)
Posts: 501

Posted:

We have on the agenda at our next meeting to discuss using a foreclosure firm (not attorney) to attempt to collect dues prior to sending to foreclosure. I believe we are being encouraged by the property manager due to some of the national fallout of HOAs filing for foreclosure lawsuit. The deal is that the collection firm will spend a lot of time badgering the owner to pay (sending letters, phone calls, etc) that the property manager or foreclosure attorney won't do, and that it would be a softer touch than sending directly to foreclosure.

Regarding costs, all costs will be billed to the owner. So if the collections company collects 50%, then a 50% charge is added to the homeowner account. No cost to the association.

We don't deal with social security numbers.

Not sure what the Board will say about it, but we are entertaining the idea at the next board meeting.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By MichaelT21 on 05/20/2022 5:42 PM
We have on the agenda at our next meeting to discuss using a foreclosure firm (not attorney) to attempt to collect dues prior to sending to foreclosure. I believe we are being encouraged by the property manager due to some of the national fallout of HOAs filing for foreclosure lawsuit. The deal is that the collection firm will spend a lot of time badgering the owner to pay (sending letters, phone calls, etc) that the property manager or foreclosure attorney won't do, and that it would be a softer touch than sending directly to foreclosure.

Regarding costs, all costs will be billed to the owner. So if the collections company collects 50%, then a 50% charge is added to the homeowner account. No cost to the association.

We don't deal with social security numbers.

Not sure what the Board will say about it, but we are entertaining the idea at the next board meeting.

?????????????????????????????????

MichaelT21 (Arkansas)
Posts: 501

Posted:

Quote:

Posted By MaxB4 on 05/20/2022 6:47 PM

Posted By MichaelT21 on 05/20/2022 5:42 PM
We have on the agenda at our next meeting to discuss using a foreclosure firm (not attorney) to attempt to collect dues prior to sending to foreclosure. I believe we are being encouraged by the property manager due to some of the national fallout of HOAs filing for foreclosure lawsuit. The deal is that the collection firm will spend a lot of time badgering the owner to pay (sending letters, phone calls, etc) that the property manager or foreclosure attorney won't do, and that it would be a softer touch than sending directly to foreclosure.

Regarding costs, all costs will be billed to the owner. So if the collections company collects 50%, then a 50% charge is added to the homeowner account. No cost to the association.

We don't deal with social security numbers.

Not sure what the Board will say about it, but we are entertaining the idea at the next board meeting.

?????????????????????????????????

Can you elaborate? I am not sure how to interpret your comment.

SteveH35 (Washington)
Posts: 339

Posted:

Quote:

Posted By JustinT5 on 05/20/2022 3:38 PM
Just read an article about HOA's using credit collection agencies to get past dues instead of doing leins and foreclosures. Are these types of collection agencies worthwhile to pursue? I cant' think of any downsides.
news article below:

http://cltdevelopment.blogspot.com/2013/02/homeowners-association-gets-creative.html

Justin,

Having recently experienced the horror of a law firm (that thinks it does a good job) actually doing a poor job of communicating to collect past-due assessments, I'll tell you that trying a collection agency (there's at least one well-respected national firm) that has no up front fees and only charges the interest and late fees to collect is worth doing. I would NEVER recommend paying any collection agency any portion of an assessment because then your CIC is short assessment funds impacting every other homeowner.

Spending $500 to $5,000+ up front to pay a law firm to file liens and foreclosure suits is not the way to go.

Regards,
Steve

SheliaH (Indiana)
Posts: 6,964

Posted:

Which reminds me - always get a schedule of fees for the attorney's services. But should range from phone conversations to initial costs of pursuing a foreclosure. You already know or should know the final cost will vary depending on the situation, with some homeowners paying up after receiving the first nastygram to having the attorney file a proof of claim at the bankruptcy court.

Our attorney gives us such a list every year when we sign the annual letter of engagement. We also get a certain number of hours every year where our president can email or call with relatively simple questions and not be charges. To keep an eye on thst, designate ONE person to talk to the attorney and have the board authorize the contact before the phone call or email.

With a list of fees, you'll have an idea how much it'll cost to pursue legal action before you proceed. You should also tell homeowners they will be responsible for all fees generated in the association's pursuit of the debt. In our newsletter we published an example of how expensive this can get to help drive home the point of (1) paying assessments in full and on time and (2) notifying the board of you fall into financial hardship so payment plans can be negotiated. When we can get the money quickly without having to duke it out in court, the happier everyone will be.

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

SteveH35 (Washington)
Posts: 339

Posted:

Quote:

Posted By SheliaH on 05/21/2022 9:13 AM
Which reminds me - always get a schedule of fees for the attorney's services. But should range from phone conversations to initial costs of pursuing a foreclosure. You already know or should know the final cost will vary depending on the situation, with some homeowners paying up after receiving the first nastygram to having the attorney file a proof of claim at the bankruptcy court.

Our attorney gives us such a list every year when we sign the annual letter of engagement. We also get a certain number of hours every year where our president can email or call with relatively simple questions and not be charges. To keep an eye on thst, designate ONE person to talk to the attorney and have the board authorize the contact before the phone call or email.

With a list of fees, you'll have an idea how much it'll cost to pursue legal action before you proceed. You should also tell homeowners they will be responsible for all fees generated in the association's pursuit of the debt. In our newsletter we published an example of how expensive this can get to help drive home the point of (1) paying assessments in full and on time and (2) notifying the board of you fall into financial hardship so payment plans can be negotiated. When we can get the money quickly without having to duke it out in court, the happier everyone will be.

Sheila,
While I will agree that communication is critical for CIC homeowners, posting more information people don't read to a newsletter does not fix the people who fail to read their mail that are past due thousands of dollars. Likewise, every legitimate law firm will disclose their fee schedule as part of signing a fee agreement with them, but knowing the fee schedule as a CIC does not make the collection process any more reasonable. Attorneys are not collection agencies. They do not use all the technological means available to discover what's happening with past-due owners' finances, nor to contact them to collect the past due amounts. Empowered with the revenue that is past due fees and interest, collection agencies are free to bargain away to get your CIC what you're owed.

Regards,
Steve

SheliaH (Indiana)
Posts: 6,964

Posted:

And you know this because you've contacted EVERY law firm in the country who does collections and have seen all of them in action? Yeah, right. Let's just agreed to disagree - it's what grown folks do and Justin can run with sone, none all all of what's said here or any conversation on this website

It's true some people don't read - that's why it's so easy to fool and rip them off. Hiwever, I find its better to let people know up front what's coming if they try me - let's have THEM explain to the judge why they blew off the letters from the management company before the account went to the attorney and didn't read the annual letter with the upcoming years budget and the new assessment. By the way, that letter also includes a coupon book and envelopes to mail the check (unless they pay online or have a setup with their bank to automatically send the money at a specific time - that's how I pay my assessments.)

The attorneys fee schedule is for the board so We can evaluate how much legal action will cost do we can gauge that against what's owed, but if homeowners wanted to see it, they could because it's part of the association records they're entitled to see. If course, that doesn't include reviewing a neighbor's account, but they can have an its see accounting of their own.

The owner's payment history comes into play because it we've done this before, we may be inclined to skip the nastygram and go straight to court. If we find there is a tax lien, we may have to do something else, and at some point we may have no choice but to write off the debt if the cost of what's owed doesn't justify. There is a thing called throwing away good money after bad - you've heard of that, yes?

When I was board treasurer, I took no pleasure in taking legal action against homeowners, but homeowners are business partners with each other in a HOA. The board has the duty to make sure everyone pays their fair share and I would discuss every possible option to see what would work quickly and at a reasonable cost.

If a collection agency can do what we couldn't, great, but I never found one that wouldn't charge upfront costs of the was something we could live eith. If you've found such an agency, good for you. But I will never apologize for letting homeowners know what the board is doing and why, and how much it will cost them (they pay assessments too, remember?). You go ahead and do you, whatever that is.

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

SteveH35 (Washington)
Posts: 339

Posted:

Quote:

Posted By SheliaH on 05/21/2022 9:49 AM
And you know this because you've contacted EVERY law firm in the country who does collections and have seen all of them in action? Yeah, right. Let's just agreed to disagree - it's what grown folks do and Justin can run with sone, none all all of what's said here or any conversation on this website

It's true some people don't read - that's why it's so easy to fool and rip them off. Hiwever, I find its better to let people know up front what's coming if they try me - let's have THEM explain to the judge why they blew off the letters from the management company before the account went to the attorney and didn't read the annual letter with the upcoming years budget and the new assessment. By the way, that letter also includes a coupon book and envelopes to mail the check (unless they pay online or have a setup with their bank to automatically send the money at a specific time - that's how I pay my assessments.)

The attorneys fee schedule is for the board so We can evaluate how much legal action will cost do we can gauge that against what's owed, but if homeowners wanted to see it, they could because it's part of the association records they're entitled to see. If course, that doesn't include reviewing a neighbor's account, but they can have an its see accounting of their own.

The owner's payment history comes into play because it we've done this before, we may be inclined to skip the nastygram and go straight to court. If we find there is a tax lien, we may have to do something else, and at some point we may have no choice but to write off the debt if the cost of what's owed doesn't justify. There is a thing called throwing away good money after bad - you've heard of that, yes?

When I was board treasurer, I took no pleasure in taking legal action against homeowners, but homeowners are business partners with each other in a HOA. The board has the duty to make sure everyone pays their fair share and I would discuss every possible option to see what would work quickly and at a reasonable cost.

If a collection agency can do what we couldn't, great, but I never found one that wouldn't charge upfront costs of the was something we could live eith. If you've found such an agency, good for you. But I will never apologize for letting homeowners know what the board is doing and why, and how much it will cost them (they pay assessments too, remember?). You go ahead and do you, whatever that is.

Shelia,

I've never claimed to be omnipotent. There's little need to argue about having experience with *EVERY* law firm. Competency is rarely measured in absolutes.

In Washington State, there's no "skipping the nastygram and going straight to court." Our legislature fixed this last year by providing a very specific notice process for collections. I can only hope that other states do the same. Collection agencies are generally quite good at one thing. Law firms simply are, in general terms, not as capable at collections until it comes time to file a foreclosure lawsuit when an attorney needs to take over.

For anyone interested, here's a search with some relevant results: https://www.bing.com/search?q=association%20collections&qs=ds&form=QBRE

Regards,
Steve

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By SheliaH on 05/20/2022 5:23 PM
We considered collection agencies, but as Max stated, they usually take a huge cut of the amount due. Foreclosures can be even more expensive and usually the HOA doesn't get anything because if there's a mortgage, the bank gets paid before anyone (except for a tax lien) and often there's not enough money left to pay the HOA.

Having dealt with delinquencies for half of my 10 years on the board, the most important thing I can suggest is to have a sit down with your association attorney or a really good collection attorney who specializes in HOA collections (they're not always the same person). Take a good look at your policies and procedures to see what needs to be changed and there should be some method to the madness. Generally, foreclosure will be the last resort after everything else has failed.

I agree with all the above, based in experience with HOAs/COAs who have used both.

BarbaraT1 (Texas)
Posts: 821

Posted:

I don’t think collection agencies work. It’s just more letters for the homeowner to ignore. Liens and foreclosures are the most effective collection tools.

In Texas, the state legislature has placed many restrictions on how HOAs can collect. There’s virtually no chance that grandma is going to lose her home because she was a day late and five cents short or whatever the cautionary tale is. I’ve also never worked with an attorney that wasn’t well versed and skilled at collecting. (There are some that aren’t, and I don’t work with them).

LetA (Nevada)
Posts: 2,679

Posted:

Quote:

Posted By MelissaP1 on 05/20/2022 4:30 PM
It also should be noted that HOA's should NOT have access to your social security number. If you gave yours to your HOA, that is all on you. They have no need to access or view my credit ever. If I don't pay my dues, they can lien or foreclose on me. Otherwise do not even think about my credit.

Lawsuits are the worst way to pursue collections. Next would be hiring a collection agency. Both cost money and not guaranteed to see any of it.

You can still place a collection item on the three reporting agencies without a SSN

LetA (Nevada)
Posts: 2,679

Posted:

Quote:

Posted By JustinT5 on 05/20/2022 4:49 PM

Posted By MelissaP1 on 05/20/2022 4:30 PM
It also should be noted that HOA's should NOT have access to your social security number. If you gave yours to your HOA, that is all on you. They have no need to access or view my credit ever. If I don't pay my dues, they can lien or foreclose on me. Otherwise do not even think about my credit.

Lawsuits are the worst way to pursue collections. Next would be hiring a collection agency. Both cost money and not guaranteed to see any of it.

OK, then what is best way to pursue collections? I was thinking of putting a sign at the front of the neighborhood with those with past dues. just like government does when you dont' pay your taxes in the newspaper.

What ever is spelled out in your governing documents. Typically it is two demand letter, the second being the final notice for the next step. Collections, then after a said period of time a lien is filed.

LetA (Nevada)
Posts: 2,679

Posted:

Quote:

Posted By BarbaraT1 on 05/21/2022 6:02 PM
I don’t think collection agencies work. It’s just more letters for the homeowner to ignore. Liens and foreclosures are the most effective collection tools.

In Texas, the state legislature has placed many restrictions on how HOAs can collect. There’s virtually no chance that grandma is going to lose her home because she was a day late and five cents short or whatever the cautionary tale is. I’ve also never worked with an attorney that wasn’t well versed and skilled at collecting. (There are some that aren’t, and I don’t work with them).

The Nevada legislature changed how HOA's can foreclose. HOA's are sill considered a super priority, but the first step in a foreclosure with a mortgage. the HOA must communicate their
intention to foreclose on the property for non payment of assessments. The mortgage holder is required to send the HOA up to 9 months of assessments in arrears.
This is why is is important to stat within the 9 months so the HOA don't get screwed.

LoriM15 (Florida)
Posts: 1,009

Posted:

We do use a type of collection agency but they add on their own fees so when the balance is paid we get all of the past assessments. Once an outstanding balance gets to $1000 it goes to the consultant and all communication with the homeowner is with her from then on. She has an attorney who files the liens and can do foreclosure. Each month she sends a letter with the outstanding balance. Homeowner has to pay any assessments, late fees, interest and all collections costs. We are going to do a foreclosure in a few weeks with our one problem homeowner who owes us $13,000 I have to say the system we have works great for us because it’s all taken care of for us but it is expensive for the delinquent homeowner.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By MichaelT21 on 05/20/2022 7:24 PM

Posted By MaxB4 on 05/20/2022 6:47 PM

Posted By MichaelT21 on 05/20/2022 5:42 PM
We have on the agenda at our next meeting to discuss using a foreclosure firm (not attorney) to attempt to collect dues prior to sending to foreclosure. I believe we are being encouraged by the property manager due to some of the national fallout of HOAs filing for foreclosure lawsuit. The deal is that the collection firm will spend a lot of time badgering the owner to pay (sending letters, phone calls, etc) that the property manager or foreclosure attorney won't do, and that it would be a softer touch than sending directly to foreclosure.

Regarding costs, all costs will be billed to the owner. So if the collections company collects 50%, then a 50% charge is added to the homeowner account. No cost to the association.

We don't deal with social security numbers.

Not sure what the Board will say about it, but we are entertaining the idea at the next board meeting.

?????????????????????????????????

Can you elaborate? I am not sure how to interpret your comment.

THINK, about what you said.

MichaelT21 (Arkansas)
Posts: 501

Posted:

I made a mistake in my post. I meant collection firm, not foreclosure firm.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

What is a foreclosure firm??? Do they exist?

Former HOA President

MichaelT21 (Arkansas)
Posts: 501

Posted:

Quote:

Posted By MelissaP1 on 05/22/2022 6:56 AM
What is a foreclosure firm??? Do they exist?

That was a mistake on my part. I mean collection firm, not foreclosure firm.

MaxB4
Posts: 3,513

Posted:

If the owner owes $100.00 and you send to a collection agency, the agreement is, if they collect, you may get $500.00 and they retain $500.00. How do you then charge back the $500.00 you gave the collection agency for collecting your debt?

MichaelT21 (Arkansas)
Posts: 501

Posted:

Quote:

Posted By MaxB4 on 05/22/2022 10:30 AM
If the owner owes $100.00 and you send to a collection agency, the agreement is, if they collect, you may get $500.00 and they retain $500.00. How do you then charge back the $500.00 you gave the collection agency for collecting your debt?

I don't know.

We have a meeting with the sales rep at our next Board meeting, and will ask that question. I think that if the owner owes $1000 and their fee is $500, they need to collect $1500 and not $1000.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By MichaelT21 on 05/22/2022 12:30 PM

Posted By MaxB4 on 05/22/2022 10:30 AM
If the owner owes $100.00 and you send to a collection agency, the agreement is, if they collect, you may get $500.00 and they retain $500.00. How do you then charge back the $500.00 you gave the collection agency for collecting your debt?

I don't know.

We have a meeting with the sales rep at our next Board meeting, and will ask that question. I think that if the owner owes $1000 and their fee is $500, they need to collect $1500 and not $1000.

YOU need to know how the process works before trying to engage a collection agency. A collection agency is used when all other avenues have been exhausted. The $1000.00 is written off as bad debt and forgotten about. If you do collect the $500.00, it a BONUS, with a capital B.