Suggestion/ideas on how to collect previously owed assessments?

I have accumulated various suggestions and ideas throughout the years from previously written threads posted on HOATalk.com. I would appreciative it, if you would offer additional suggestions to me and others, in an attempt to resolve this particular issue.

The board has done everything (we believe) possible to recover previously owed assessments, all the while paying additional fees (attorney fees/court costs) to further proceed in the collection process, only to have collected very little, some times NOTHING at all.

That doesn’t even seem legal!

In hind sight it’s probably cost the association more money that it would have if we had NEVER pursued the lien in the first place. Hundreds of thousands of Dollars are allocated (budgeted) to collect previously owed assessments. It’s absurd!

I do believe that filing the lien was and still is in the community’s best interest. It’s the added security the board can provide the association when collecting assessments.

I understand that I have a fiduciary duty (board member) as outlined in our governing documents to pursue all delinquent assessments/fines, however, what about the moral obligation I have to my myself and my community? I continue to spend the money (of those in good standings) to proceed forward in collecting the money rightfully owed to us. I'm finding it more difficult (daily, weekly, monthly, and even yearly) to continuously allocate money to recover money has is nearly impossible to collect.

What other collection suggestion/procedures do you recommend? I’m open for suggestions. We currently have a PM. We have a collections attorney as well as a POA attorney, if he can help?!

More information can be provided as needed.
I eagerly await your responses.

Thank you all in advance.

Chuck W.

GeraldT4,

Currently our assessments are due on or before January 1st and late if receive after the 10th. A late fee is assessed to any account that is NOT paid in full by the 10th. At which point an additional 30 days is provided to make payment. Time is granted with the understanding that if payment isn’t received the account will incur additional cost and a lien will be filed on the home, at which point the account will be turned over to the collections attorney and payment arrangements will need to be made through the attorney.

Once the PM turns the account over to the collections attorney there are many charges, and letters being mailed to the HO in attempts to collect the amount owed on the account, as well as trying to establish a payment option, all along incurring interest (which are occasionally removed “IF” the HO is willing to pay in full).

The PM emails the board once he has spoken to the collections attorney who is general requesting for additional money and recommends filing suit. This has been done on countless accounts!

I don’t know all the legal terminology, process of which is followed in court. I’m familiar with only the costs that have been requested of us.

We have paid a fee for Contempt of court, which to my understanding is when the defendant doesn’t appear in front of the judge. All the while interest is accumulating, as well as court costs and attorney fees. The association pays in hopes to recover ALL the money spend while collecting the assessments owed.

There is a charge for this and a charge for that. All along the board is told (by the attorney) the money will generally be recouped when the house either sells or the homeowner refinances. Mean while the association keeps paying more and more money in attempt to collect what is owed to the association. The board even met with the PM and collections attorney to get a better understanding of this process.

I always thought that when the board paid to file suit, it was then the assessments became court ordered. (If the judge ruled in favor of the association) I though the governing documents (I was always told) are official, when in comes to collecting assessments.

I appreciate you wanting to help, although I can’t provide you/others with the information that will help me though this tiresome time.

I will attempt to provide you with as much information as possible.

Thanks again.
Chuck W.

Chuck - Once anything is turned over to an attorney fees are incurred. Since you've not recovered the late fees to your satisfaction I would think you may try to prolong the period of time you continue to send notices prior to giving it over to attorney collections. Send more letters stipulating the late fees, payment policy, and the termination of use of common element amenities, and loss of the right to vote. I would also send all owners a letter detailing the importance of paying their maintenance fees on time. In the letter I would provide the amount of outstanding balances due (no addresses, and no names) and mathematically show the impact on all those that are current. For example if you collect $100.00/month per owner and there are 175 owners $17,500.00 needs to be collected. Say 20 owners are past due for one month. If those 20 owners don't pay, the remaining 155 owners will have to fund the outstanding balance of $2,000.00 per month, in other words apprx. $13.00 each. Be fare to your neighbors and resolve the past due balances.

Now here's where there can be great debate. What if you and your Board consult your attorney and he says that you can state in your letter that the names and addresses of those with past due balances is technically available for all owners to review upon written request. If that's the case, perhaps publishing the possibility of owner review will net some past due balances. Scare tactics can be quite effective, and you have a fiduciary duty to get those balances paid. No one wants to look like a deadbeat, at least I hope not.

GeraldT4,

That’s a good recommendation. Our association does void any member’s ability to vote and also use of the amenities, when late. Unfortunately, the members that lose these privileges don’t really care, to be honest with you.

I also felt as though it was best to increase the late fees to the maximum allowed, per of covenant, by “hitting them in their pocket” did do anything, just made the association look money hungry.

I will recommend the letter and hopefully we can begin to collect on some of these delinquent accounts prior to any bankruptcies or foreclosures.

I had asked for opinions last year concerning that “HOT” topic about listing names and I too realized that maybe that wasn’t the best thing to do. I certainly didn’t want to abuse my power. I felt it was best NOT to list names. However I did express the procedure in the monthly newsletter, which provided a detail of what would happen when annual assessments were not paid, and why you would want to pay your assessments on time.

I guess it’s time to get ugly. I’ve been mister nice guy for toooooo long! I learned from my parents,(maybe not the best way to be taught, but I learned rather quickly) what they couldn’t teach me, I learned from embarrassment.

This method occasionally works with small child, perhaps it will work with adults who act like children. I feel its worthy of consulting the attorney once again though. Just wouldn’t want to put the association in jeopardy with a law suits from any disgruntle HOs.

I’m certainly torn between the two, however at this point I feel I would make more friends than I would enemies.

Thanks for the suggestion.
Chuck W.

Charles we went with an attorney that specialized in collections. If at the end of 90 days the homeowner has not made arrangements with the BOD to get current we turn it over to the attorney to file a lien. At this time the HO can figure that what s/he owes has just increased by 50% which when the attorney collects is his fee + court costs. If it gets to the foreclosure stage we also charge the HO fair market rental for their unit each month. Recently the BOD enacted that HO who were chronically late would be charged double the late fee.

GlenL,

Has doubling the late fees done anything as far as collecting, any sooner? I’m not so sure that will work in our association. Although it sounds good in theory

I’m highly doubtful it will in our community “IF” imposed.

Thanks for the suggestion though.

Chuck W.

BrianB

You are correct we have and will continue to revoke all privileges to vote and their use of the amenities, although those who are delinquent don’t used the amenities nor do they vote, so it really isn’t effecting them one way or the other. Sad, but true!

The board and I have educated the members residing within our community and stressed the importance of paying annual assessments. We also explained, last year, what would happen if they weren’t paid or on time. Apparently that didn’t work as well as our board had predicted. They HO may have been listening/ reading however, they didn’t hear or acknowledge what was being addressed to them.

It maybe about the time to start a newsletter again. Perhaps every quarter would be enough and not such a burden on the board as far as time and expense of mailing it to the residents, those who even read it of course wouldn’t think it was although they aren’t familiar with all that does into producing such a newsletter. I know first hand.

The board and I understand that as long as the lien is in place and renewed (liens expired every 5 years, we learned) the association WILL receive payment “IF” they don’t file bankruptcy of go into foreclosure. However, until then all the members in good standings continue to cover the expense of those who don’t!

It’s extremely difficult to justify our annual budget year after year when it reflects delinquent accounts. It is then when residents (in good standings) question the board intent to collect, by using “their “money (completely understandable). I too would be equally frustrated, as you would be.

Thanks for the suggestions.

Chuck W.

Chuck - Monthly newsletter is good, it gets the notice out to everyone. I'd send another newsletter with a front page feature of the number of accounts in arrears, the total amount outstanding, and what it means to each of the paying owners. Don't get into the specifics of how much it costs to pay atty. fees, etc. Others may see it as a state of diminishing returns.

CharlesW1 - IMHO there's nothing wrong with announcing the financial situation of the association. Again, no names, no addresses, etc. You could include the info in a newsletter article the subject of which is Operating an HOA - Volunteerism, and Your Tax Dollars at Work.

Chuck - You'll do what you want but....you may never really know until you try, and maybe even try again. Social circles can be extremely influential and some may not be happy, as they should, that others aren't paying.

Chuck - Reinforcement of what's required is always a good thing. Those that have not paid assessments may feel some pressure to comply, especially with a more targeted approach that doesn't exactly single them out. If everyone was reminded that access to association records upon written request with reasonable explanation is granted to any owner, that may send an additional message/warning to the deadbeats or delinquents.

GlenL,

I’m glad too hear this method is working for you in your community. I could only wish something like that would work for our association.

The problem is those violators that don’t comply in the allotted time permitted do get fined however, they don’t pay, so basically you could double, triple of even quadruple the fine won’t resolve the issue. I wish it would, but not the case.

Thanks for the suggestion though
Chuck W.