Investigation by visiting and talking

My reply is going to seem really hard-hearted. But frankly, it doesn't matter what the situation is or why they haven't paid. Your HOA is a business and when someone doesn't pay for the services of the busines, for whatever reason, you have an obligation to collect the money. In effect you and all your other dues-paying neighbors are subsidizing that homeowner.

We've had situations where the homeowner will be contacted about an outstanding amount and then claim that the person who they spoke to from the office told them they didn't have to pay - just because the person was sympathetic to their issue.

I say that it's better not to get involved.

I agree 100%. The fact that the homeowner has not responded says it all. Start the foreclosure process.

Thanks all.

It makes me want to wail and gnash my teeth. Some years ago, I had a medical issue and lost track of 'things' and ended up paying ~$250 in fines over a matter that I was unaware of (because when you've just had a piece of your anatomy removed by a huge 4-armed robot, your interest in checking the mail reaches record lows). I wish the system could be a little less impersonal.

But I do get the point y'all are making. One thing this gig has taught me is that doing Good Deeds is *hard work*.

And, also: people lie a lot

BillD

Our property manager has said that the federal debt collection act has very specific requirements on how to discuss unpaid debt with homeowners.

I would never in a million years discuss a debt with a homeowner.

Bill,

When I was treasurer, we had two lots that were a year behind on assessments.
I proposed to the board that we waive late charges if they pay past due assessments and the current year in full (it was around Jan or Feb time frame).

Once I had approval, then I went and talked to the individuals.

Why they did not pay is not my concern and I never asked (as it's not my business).
I simply made an offer on how they could resolve their issue otherwise the board would turn the issue over for collections and foreclosure.

Therefore, my suggestion is - go with approval from the board and an offer of some type.
Don't try to be a friend/neighbor - that is not your purpose at this time.

I think the way Tim framed a visit sounds good. I agree with him & others not to ask about their personal issues, etc.

We have found that the people who owe lots of money and have liens are the ones who never respond. I had one guy tell me he doesn't open up certified mail because it's always bad news. Another sent back the certified letters unopened. Sometimes it's that they don't have the money. Other times it's because they have gotten a fine they didn't think was justified and are mad at the association so they just don't pay. The homeowner in our community with the biggest debt has some kind of mental illness where he never pays bills until he is forced to. He is in the middle of a huge lawsuit and keeps changing attorneys because he refuses to pay after the retainer runs out. He has bills due all over town - but he has the money to pay. But I think most homeowners who get into financial trouble and can't pay realize the inevitable is that they are going to lose their home and try to ignore it as long as possible.

I think it's more appropriate to approach this in a businesslike maner - too many minefields if you approach the homeowner this way. You mat get cussed out big time or a beatdown Mike Tyson and Floyd Mayweather combined would dish out. There's also the potential of people accusing the board of favoritism towards Mrs, M vs. Mr. Hyde because no one likes him anyway.

If you have a property manager, have him ir her send a letter via certified mail, asking for the money within a specified time. If the homeowner would like to request a payment plan, he or she can contact the manager, who will contact the board to schedule l e a meeting. This should be an executive session where you can ask your questions and go from there.

Although you haven't had a lot of delinquencies, the board should already have a collection policy. This ensures consistency and fairness in addressing them and it's appropriate to say failure to pay can and will ultimately result in foreclosure. Talk to your association attorney about setting up a policy. I think they should be distributed to homeowners every year do they can't say they didn't know. M6 community sends it with the upcoming year's annual budget.

Bill

If you are this deep into the collection process with this owner, your attorney should have long since been involved and, at this point, should be the single point of contact with the owner.

It has been my experience the attorney will make any such offers and your Board or a representative should communicate the present thinking to the attorney.

I know others have dissuaded you from knocking on the door of the owner, I will add my two cents worth and tell you not to even think about it.

Aside from the fact only the attorney should be talking to this owner about their account, there is too much danger to you personally--you never know when someone will come to the door with a .38 revolver in their hand.

The attorney we use for our clients has made it very clear once the account has been sent to his office as part of the collection process of the Association, no one from the Board should speak with the owner about the account. Even if the contact is initiated by the owner whose account is in the collection process.

Not only that Bill, if the HOA sent the account to collections, any contact from the board could be considered harassment and that opens an entirely different can of worms.
HOA's have been behind the 8 ball because of covid and the restrictions from collecting on bad debts. My HOA got burned for over $1500 when a house sold and whoever was responsible for
saying AHEM!!! there's a matter of XXXX$ on the account that is owed to the HOA.

Bill

The Board does not have the option of 'passing the bag' to the PMC. What can the PMC do without board authorization?

The Board must make a decision to foreclose as part of its fiduciary responsibilities to the other owners and the Association.

Because the person is disabled does not grant them a pass on paying their bills. Besides, as I have noted in other posts, the Texas Property Code requires the delinquent account owner be offered a payment plan. Did this owner accept the offer or ignore it? Or default on it if accepted?

What about the owner across the street who just lost her job with some Austin Silicon Valley tech clone company? Will you foreclose on her? If not, why not? She may have fallen on hard times, are her hard times any different than the disabled neighbor?

If she, and the disabled owner, have been taken through the Association delinquent account collection process and you are now at the point where foreclosure is the next step, you must take it.

If the Board does not take the steps it should, it cannot foreclose on any owner for non-payment. There is a term for this: selective enforcement.

I recommend your Board invite the association attorney to the next meeting and have him or her review your options at this point.

I understand everything you're saying. But realistically? I don't think anyone on the Board is going to vote for foreclosure in these circumstances. I know *I* won't{1}.

Re a payment plan etc, my understanding is that the owner has ignored all attempts to communicate.

> I recommend your Board invite the association attorney to the next meeting
> and have him or her review your options at this point.

This latest chapter of the story began when the attorney asked the Board if it wanted to Foreclose or simply Close The File.

BillD

{1} I believe in God. He may or may not someday call on me to account for my actions. Will I stand before Him and proudly declare "I foreclosed on that disabled man to fulfill my fiduciary obligations"? No fucken way.

I totally don't understand this. You have no information on why the disabled person is not paying and you are ready to give him a free pass. Why? Disabled people can mismanage their money just like anyone else it has nothing to do with their disability. Disabled people can also be complete jerks like everyone else and make life difficult for everyone else. Being disabled doesn't give the person the right to go silent when it comes to ignoring their past due bills. Just like everyone else they need to grow some balls and contact the HOA to discuss the issue.

I wouldn't hesitate to foreclose on a disabled person who wasn't willing to work with the HOA. There is no excuse not to do this when the end result is the other owners have to pick up the tab. What if one of the other homeowners had cancer and was struggling to pay for medical treatment? Would you feel bad knowing the disabled person who is burying his head in the sand is part of the reason that the person with cancer now has to pay more HOA fees? I'm honestly shocked at your attitude.

Bill

Don't be blinded by the 'disabled' label.

My father was rated 100% disabled by the VA as a result of his service in WWII. Why? He contracted pneumonia while stationed in Denver, which led to pneumonia off and on the rest of his life, with bouts of emphysema along the way. Of course the three packs of unfiltered Pall Malls smoked daily were no factor. He never left the US, never was in combat. Still, it was a service connected disability and the VA doctors considered him 100% disabled under the evaluation rules.

He worked for Continental Baking, driving a delivery truck to supermarkets for 40+ years delivering Hostess cupcakes and Twinkies. Still, if Los Angeles County reported on such things, he was disabled. In retirement he golfed 18 holes, 3 times a week, with his friends and went fishing in Baja a couple of times annually. Disabled does not automatically mean one is in a wheelchair or worse.

Someone else pointed out, no one is going to lose a house over $3,000. If this person wishes to do the right thing, they will list the house, have five cash offers and a bidding war by Monday--you know what the housing market is in this state.

Don't let yourself your feelings and emotions get in the way of doing what you were elected to do.

BillD,

As a matter of fairness, if your Board doesn't wish to force dues collections against homeowners who are disabled, your board ought to revise your CC&Rs to state this. All disabled people in your community should be treated equally, and there may be others who are struggling and would benefit from the same opportunity you are providing to the one disabled person who is behind their dues. All similarly situated homeowners should be treated the same, so if one disabled person is giving a pass on dues, you should afford that to all disabled people in your community.

I get the impression that Bill would choose against foreclosure on anyone within his development, disabled or not.

And that's his choice to make.
He is one vote on the board.
Majority rules.

Over a $3000 debt? You're absolutely correct. The shame would kill me.

Again: absolutely correct. We're meeting tomorrow night, I'll let y'all know how it goes.

BillD

We foreclosed over a $2500 debt. What is the shame in that? That's something someone can afford to pay after all. Going to lose your house over a $2500 debt? I would feel worse if it was a $50K and something someone could never afford or get a loan for.

Our person did lose their house by refusing to pay that. It was completely on them. Not our fault or guilt at all. They did not pay dues for nearly 3 years! At what point do you go "Oh it's okay they only owe $2000"? You don't.

Isn't "must" a little strong? Nationwide I think foreclosure is always (or nearly always) one of the discretionary powers of the Board. That is, a HOA is not required to foreclose when a person is delinquent in the payment of assessments.

BillD16 indicated a lien is on the property. Assuming no other delinquent owner is having her/his lien foreclosed, then for this particular owner I think BillD16's Board has likely fulfilled its fiduciary duty and is also in compliance with the covenants.

You do realize a foreclosure stops as soon as the debt is paid right?

It should also be noted no one says you MUST file a foreclosure. There is no reason why you can not keep a lien on the property. The lien does accumulate over time. It just that there is a time and/or an amount that one has to start thinking Foreclose?

Our dues were only $50 a month. If you do the math, $2500 owed was 50 missed payments. That is about 4 years of living "free" on the HOA dime. Your mileage may vary the more amount your HOA collects monthly or yearly. We set a 6 month we liened and at 1 year owed we considered foreclosure due to the circumstances. Which if the bank was foreclosing it's not a situation the HOA should do one as well. A foreclosure is basically doing the work of the bank of which they get paid first and formost (in many states without super lien status).

If your that concerned then and don't want to do a foreclosure, then make sure you have a lien in place. I would go so far as to make sure a certified letter is sent to the home monthly or whenever dues are owed. Don't open it if it is returned. Proof they were served. That way when the time to "stop the bleeding" finally happens, you have more proof for the case.

People are making it sound like it goes from delinquent to foreclosure in 2 seconds. That's not the case at all.

In our association, we allow a homeowner to get about a year behind in dues. We charge late fees, penalties, and interest. Once the homoewner get to about $1000 in dues owed, we then decide if we want to send them to the attorneys office for "legal collections". If we do, which our current Board is pretty hardline about, then the attorney's office sends out demand letters for about 2 months and attempts to collect on it. After about 2 months of collections, if no success, we then have to decide if we want to pursue a foreclosure lawsuit. The first step in a foreclosure lawsuit is a process server provides the paperwork to serve to the homeowner. Then the homeowners are given a couple more months to pay up. Finally, they are invited to a hearing to provide their legal defense to the judge. And then, and only then, does a judge rule to foreclose on the home.

But even if the judge forecloses, nothing necessarily happens. Then the HOA has the power to foreclose, or if the HOA believes that the homeowners have an income stream, the HOA can choose to garnish paychecks or bank accounts to pay back the HOA. Or, at that point, the HOA can force a sheriff's sale on a home.

What I'm saying is there many points where the owner can stop the foreclosure proceeding, and there are many points where the HOA can also pause the foreclosure proceeding.

in 3 years, we've sent probably 10 or 12 accounts to legal collections. All have paid prior to forcing the sheriff's sale on the house. Many have paid by personal check written in full.

A year is NOT some number one grabs out of the air and assigns. There is some "science" behind the timing. Most banks do not start foreclosing for about a year of non-payment of the mortgage. The logic is that if they are not making their house payments they most likely not paying their HOA dues as well. Considering IF the HOA forecloses BEFORE the bank, it is basically doing the work of the bank which the bank gets paid first. So the bank will not mind too much if a HOA does a foreclosure as it saves them the effort... The HOA most likely will receive zilch. This is why you don't really foreclose on a house already on the bank's radar for foreclosing. You keep the lien and wait.

There is also the issue of "Tenant's rights". An owner may not be paying the dues. Well they can't just kick out their tenant because of this. Their renter does not pay HOA dues. (Except in Florida but another story). The owner has to give their tenant proper notice of eviction which can take several months as these situations can go just as crazy. (Took me 5 months to evict my non-paying tenant).

You also have to factor in if they are on "Active duty". Some laws depending on their military status may exempt them from this. However, it is really a thin needle to thread on this area. There are always exceptions to the rule.

So when we suggest a year, it's really a good jumping off point to decide lien or foreclose? What is the best way to pursue? Each situation is different.

I know in TN, HOA liens have to be enforced within 12 months of filing.
Wondering if this was the case in TX, I did some research and found the following very informative paper from a TX attorney:

HOA ASSESSMENT LIENS: EVERYTHING YOU NEED TO KNOW TO FIGURE OUT YOUR HEAD FROM YOUR ASSESSMENT LIEN

The paper actually goes into the benefits of waiting to enforce a lien vs. enforcing (see page 33 of 40 in the pdf file - page number 27 of the paper).

I think this is an excellent read for anyone in a TX HOA/COA and a must read for any board member in a TX HOA/COA.

Note: I did not find a requirement to enforce in TX.

Bears Repeating [emphasis added]:

Bill,

Thanks for the update.

It's not uncommon, and I'm sorry I didn't think about it, for an ederly homeowner to be with relatives, nursing home or a hospital and not receive communications.

Verify that the owner didn't change to a relative (done by checking the property office).

A simple internet search may even find relatives that will address the issue once they are informed about it.

Tim