Delinquent fees fines

We are a 260 unit condo association in Myrtle Beach SC. This community is a mix of permanent residents, second homes and investors (rental property). We are now a newly elected owner controlled BOD (just transioned from developer). We found out in recent report that we are almost $90,000 arrears in monthly fees. There are four units in foreclosure and 5 in the collection process with atty.

We are sending letter to all homeowners reiterating collection policy (30 day letter/60 day letter/90 sent to atty for collection). New part of the 90 day letter is additional piece... turn off phone and cable and amenities access card.

Now here is the question.. I just received an e-mail from property mgmt. company that the phone company says that we cannot turn off the phone due to safety reasons. Has anyone heard of this.

More importanly... any ideas out there on good ideas or successful methods on collecting these delinquent fees.

Thanks for any thoughts.

Phone companies turn off a person's dial tone all the time if the person doesn't pay. Now there are exceptions in that if a person has certain conditions the phone company will be required to allow certain calls even if the phone company has not been paid.

I suspect that what you really have is that the phone company doesn't want to be a part of your collection efforts. And quite honestly, I don't blame them. And if residents pay the phone company directly, then I don't see how you could legally shut that service off. (Same goes for the cable.) Now if the services are paid for from the assessments it would be another matter. But the phone company has every reason to expect payment if they have to turn the service off and on.

MarianneG,
Hope you Hanna problem will be small, I am down the coast from you near Beaufort.

You pose a difficult picture with very little information.
However, I suspect you are a Board member and have been somehow given the responsibility to solve your problem as stated. You also state you have had turnover from the dewveloper and the Management co has informed you of these deliquencies in a recent report. That infers you knew nothing about these arrears. How did that happen? Did you use the same management co as the developer, if so, were they at the turnover proceedings? Did you have an attorney at turnover? Are you saying you actually knew there were problems, but didn't know what. If you are just trying to take over the bad debt of the developer, that was not a very good move unless this was all hashed out at turnover. There should have been present at the turnover, the developer, his appointed Board, his lawyer, the Homeowners representative and their council and the Mangement Co involved at the time. Surely someone would mention the little matter of 90K. I'm confused. You need some protection from these arrears. If they are uncollectable and they fall on you all, and your documents read like mine, you just can't write this off, you must prorate this among the present owners and they are not going to like this. I sure would clarify this with legal counci, I do not think the developer can transfer bad debts to you. Let us know.l

To RobertR:

Thanks for the good wishes.. Hanna doesn't seem too bad; it's Ike that making me really nervous. Life is good on the coast except for times like this.

As far a transition, here's how it went down. We had an election to vote in a homeowner controlled board. The property manager (hired by developer), the developer president of the board and two homeowner reps were at this meeting. The election was held (properly done, by proxy vote and those present). The election result were announced to those in attendance and the developer president left. That was that. We have not heard from or had any type of discussion with the developer since. This was about 6 weeks ago.

Since this time, the developer has since hired another property manager to represent the communities that are still developer controlled and we have the pm that was formerly theirs. We put out an RFP and are interviewing 4 companies next week.

I do feel that our transition has not gone the way it should and have posed this question to the attorney that we are meeting with on Monday. As presidnet of this new board, I want to make absolutely certain that we are doing things the right way.

Marianne and Kirk,
I think Kirk's remark about the fun begins is on target. I find it against the law of averages for a transition to go smoothly and the longer the period before transition, the rougher the road. Marianne, your account of how things went at turnover raises a lot of questions. However you stated you are meeting with a lawyer next week and you want to be ready. I can't see how the developer or the transition board can just walk away from all this debt. You all have assumed control of a business, just like any other business, your debt has to be settled. I am truly afraid you may find that the developer is not going to talk to you, nor the developers Board, and that makes his Management Co. suspect.
Be careful. Remember, the lawyer reprsents you all, make sure he understands that is what you are paying for. One final word about your new Board. If they have not joined in with you and is making this a team effort, remind them that you serve at the pleasure of the Board, which means you are not charged with unilateral responsibility. They are in this up to their hip boots and need to be on top of all this and need to have a meeting before you go see lawyer, in fact, take a couple along with you. Don't agree to anything until you all come back to the board for discussion about the meeting with lawyer.
Remember, it is not your money, and the responsibility lies with the members. They may not want it, and would rather you do it all, but you may as well set the road right now, you intend to follow. Being President is plain hard work, you sound like you will make a good one.

Marianne,
I don't want to sound lile chicken little that the sky is falling but I think your fellow owners have really loaded you down with responsibility. Al your picture clears with your last post, several things come to mind. You and your co-hort are in a minority on the Board. I would be happier if you have a majority on the Board. I don't doubt your abilities at all and would support your other full timer in a minute, I have no read on the other three and only can guess your absentee owners are going to have agendas far different than running a good association. Go very slow, and set in stone, if you can, the direction you think you should go. You might find now is a good time to formaulate a Mission Statement for the Board. This will not be a law but you may find it helps to have this documents to point to.

Joining CAI is probably a good move for you but only you and your fellow board member will be the ones under the gun, all the time, 24/7.

There is just too much detail to address, but as a suggestion how about looking around your area and pick out two or three complexes that may have similarities and pay them a visit and have a chat. This could help a lot, especially in a resort area with some many absentee owners, see what they say and learn what they do.
Also, don't hesitate to visit this site, lots of good people here, and that's the truth.

Robert,

Sorry, but I disagree. There are 1,700 members in my HOA and we have a 5 member board and a property manager. Our HOA is run smoothly and efficiently. If everyone on the board is willing to do their job and the manager is dedicated and efficient, there will be no problems. If the reverse is true then adding more members to the board isn't going to curb the problems. In fact, IMO, the more board members you have the harder it is to manage and get people to agree.

Joseph,

You said; "I'm sure your attorney has reviewed (but check anyway to see how the new FCC ruling about exclusive contracts applies to your community), to see if you can alter or amend terms of the contract to allow for turning off services for non-payment."

The FCC ruling on exclusive service contracts is for video services (MVPD). The specific prohibition reads: "No cable operator or other provider of MVPD service subject to 47 USC Section 548 shall enforce or execute any provision in a contract that grants to it the exclusive right to provide any video programming service (alone or in combination with other services) to a MDU (multiple dwelling unit). All such exclusivity clauses are null and void."

IMO, even if this ruling did apply in this case, it would have no bearing on turning off service for nonpayment. The US Code referenced has to do with regulating rates.