Delinquencies General

Started by JanK1 • 12 replies • 1721 views

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JanK1 (Arizona)
Posts: 6

Posted:

At a general board meeting, it was announced that our association is 24% in delinquencies. Is this an average number, or is this excessive? My question to our HOA was what steps do we have in place for the collection of these?

RobertR1 (South Carolina)
Posts: 5,164

Posted:

JanK,
Good question for your Board at an open meeting. I hope they answered you.
But, I point out that the Homeowner has the responsibility to know your covenants as well as the Board members.

A better question (if it is indeed the case) would be: "Our documents do not provide for any direction as to how we should administer delinquent or foreclosed property. What is the Boards policy and is this policy part of our documents, and where are they listed?

If there is confusion in your documents, question the Board about it. If nothing is there, work with the Board to have a Board member introduce a motion to include a Foreclosure and a Delinquent policy.

SusanW1 (Michigan)
Posts: 5,202

Posted:

24% of the members are in delinquency?
Or your revenues are down by 24%? If so, is that total revenue, or from the annual budget?

DonnaS (Tennessee)
Posts: 5,671

Posted:

Jan,
According to all of the news reports that I have seen this week, Arizona leads the Nation in foreclosures so 24% might be the norm out there in the desert.

Collection of these delinquencies is going to be an ongoing problem. All that you can do is to get on the list of leins against any properties that have gone into foreclosure and hope for the best. I hope that you have tried to collect from within the guidelines of your governing documents first. But be comforted in knowing that your association is within the norm these days.

MaryA1 (Arizona)
Posts: 7,043

Posted:

I believe AZ is in the top 3 for foreclosures, not the highest. However, it depends upon where you live. Some areas of AZ have a much higher rate than other areas. Our assn has a 1% rate and my city, I believe is only 10% (Glendale).

The assn should have a collection policy that it follows. However, in the case of a bank or mortgage co foreclosure, going after the h/o for delinquent assessments may be a losing battle. Therefore, the assn should also budget for bad debts. Each month we have one or two to write off. You just can't squeeze blood from a turnip, you know!

RickW (Illinois)
Posts: 169

Posted:

I'm not sure if 24% is the norm these days or not. I do know that our association has been turning any unit 2 months past due over to collections. The earlier this process has begun the better chance the association has to collect all or some of past assessments. I attended a legal seminar this week that our management company organized. the attorney strongly stressed that you need to get a legal certified letter that past due amounts are owed to the owner. It begins the back-up for any other legal movement you might need to do to collect. He also said he is urging all associations to do their best to work out a payment plan for any delinquicies, better to receive something than nothing.

EllenS1 (Florida)
Posts: 1,148

Posted:

Jan,

It will be spelled out in your covenants.

AleshaZ (Colorado)
Posts: 10

Posted:

Here in suburbia Colorado we are at 10%. We have a fairly tight 2 month then to the attorney policy.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Alessha and Rick,
How about listing your procedure step start with what action is taking at two months and then on up through the morass to the foreclosure stage.
And if you can give a $ estimate at each significant action.
Also do you all know if this is a state mandated policy or something you try to use that is in your covenants. I expect this will prove to be another catch as catch can and hope for the best outcome. I really don't see any polices we can look to and say: "If you follow these procedures you will have to spent X amount of $ to recoup what ever is in arrears.
I am sure some are going to spend much more to collect than they will collect, so, is there a way around this?

RickW (Illinois)
Posts: 169

Posted:

Robert,

Here is a link to an article posted on Community Associations Network. It somewhat describes steps that can be taken and the amount of time they take.

http://www.ksnlaw.com/publications/condo/CollectingAssessments.html

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Thanks Rick,
Even though this is written for IL. I would imagine if some BOD that don't know how to get started this kind of thing would be great value. It is not a cook book but there are no cook books for associations and this one has a lot of logic about it.

Thanks again. I know it will go into a file available to our Board should the need arise. So far, so good, but we have had an occasional problems in the past, and I doubt we ever got graded on how we went about what we did. For one thing it is not routine for us and we develop no skills and background knowledge.

RickW (Illinois)
Posts: 169

Posted:

Robert,

You're welcome, I hope it helps.

We took possession of a unit this past week. We are hoping to rent it out to collect the money owed to the association by the owner. The unti is still is some sort of foreclosure status, so the attorney has told us the lease we use will need to have a 30 termination notice. This will make it more difficult to rent, but we thought by charing less than average for rent, we might find someone.

I'm still trying to determine exactly how this works. We can rent the unit until we have made back the money in arrear, which as I understand it, means assessments and late fees. Our property manager does not think we can use the rent to pay for past legal fees spent in trying to collect the assessments. It seems to me, since the legal fees get passed onto the owner, we should be able to use the rent for this cost as well. We also might need to use a service to find a renter and I wonder if we can re-coup this cost.

Finally, let's say this owner owes the assocation $5200 and we charge rent at $1000/month. What happens when we receive the 5th month's rent and have collected $800 over what is owed?

I'll keep everyone updated as we mussle our way through.

Rick

RickW (Illinois)
Posts: 169

Posted:

Quote:

Posted By RickW on 03/08/2009 12:10 PM
Robert,

You're welcome, I hope it helps.

We took possession of a unit this past week. We are hoping to rent it out to collect the money owed to the association by the owner. The unti is still is some sort of foreclosure status, so the attorney has told us the lease we use will need to have a 30 termination notice. This will make it more difficult to rent, but we thought by charing less than average for rent, we might find someone.

I'm still trying to determine exactly how this works. We can rent the unit until we have made back the money in arrear, which as I understand it, means assessments and late fees. Our property manager does not think we can use the rent to pay for past legal fees spent in trying to collect the assessments. It seems to me, since the legal fees get passed onto the owner, we should be able to use the rent for this cost as well. We also might need to use a service to find a renter and I wonder if we can re-coup this cost.

Finally, let's say this owner owes the assocation $5200 and we charge rent at $1000/month. What happens when we receive the 5th month's rent and have collected $800 over what is owed?

I'll keep everyone updated as we mussle our way through.

Rick

Sorry, a typo, mussle was meant to be muddle!

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