Maryland Condo w/ 15% Delinquency Rate

Started by ReginaV • 5 replies • 3316 views

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ReginaV (Maryland)
Posts: 1

Posted:

I was browsing your forum and hoping for some advice. I am the secretary of a 52 unit, 3 building condo association in Baltimore city. Our fees are rather high - 45 cents / per square foot due to a huge loan for delayed maintenance on our pre-war buildings - and fees also include gas/water.

(1) We have a 15% Delinquency rate. We checked with our attorney and we cannot legally turn off water, restrict parking or publish names of non-payers. Late fee is only $15 per condo docs, so we can't raise it without changing bylaws. Are there any other things we can do besides liens and foreclosures to entice people to pay? We are going to start allowing credit card payments of condo fees.

(2) We have one owner who has not paid for over a year - her foreclosure keeps getting pushed back and she is upside down in her loan. How can we get her out? I know we will have to write off the money she owes, but we need a paying owner in there asap.

(3) Other owners owe 3-6 months in back fees and late fees - what should we do to them now so they don't escalate? It it best to sue them in small claims court before their fees get out of hand?

(4) Are there any local condo associations we can join? I saw a MD homeowners association - are there any more out there?

Thanks!
Regina

SheliaH (Indiana)
Posts: 6,964

Posted:

If this is your first visit to the website, welcome! I joined about a year and a half ago and have picked up tons of good information.

As far as condo associations go, the Community Association Institute may be a good place to start (I think the website is www.cai.org, but you can Google it). It has state and local chapters and if you don't want to join at this time, you can usually attend various meetings for a higher fee.

You may have noticed that delinquencies and how to collect them is all over this site - you may want to use the search mode to find some of the more recent threads for some ideas. Bottom line, it sounds like your group needs a formal collection policy or previous boards have ignored it and now you have a mess. Before things get messier, you might try to have a "come to Jesus" meeting with the homeowners and let them know the consequences of not paying and from this point on, the board of directors will be taking consistent measures to collect. Send a copy of the policy to everyone (run it by your attorney first to make sure everything's legal) and then do what you gotta do.

You should also find out why people aren't paying - if there's been job loss, disability, etc., the board should be willing to work out a payment plan. Get it in writing - the agreement will help you if things wind up in court.

Good luck!

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

JeffT (Maryland)
Posts: 83

Posted:

Our association is in Baltimore county. We have two law firms. One is our main lawyer and the other is our collection lawyer. the collection lawyer read our documents and accepted to be our collection agent because he can try to collect and our docs say that the owner has to pay all costs associated with collection. So as soon as the assessments, fines, etc go over 30 days late, he get the info and immediately sends letters to collect. When he collects we get the full amount and is paid by the homeowner. If they do not pay he files a lien. Effectively we have a free lawyer.

This helps, but we still have some outstanding balances. We have just had an annual election and some new board members. I am on the board. I plan to address the delinquencies. If I find out more I will post.

One thing that we can to is to have a hearing and take away the voting rights of the delinquent owner. If you have a lot of them, this could be significant. You could then call a special meeting to change some by-laws. If you do not have a clause that says the delinquent owner must pay all collections costs and fees, or whatever you want to make it easier to collect.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Jeff,

Just a few points:

1) The attorney's services are free ONLY if the member pays up! When the delinquencies of a particular member become a bad debt to be written up. the assn is left holding the bag regarding attorney's collection fees.

2) You can only take away a member's voting rights if that is expressly stated in the gov docs

3) Depending upon what your docs say about collecting delinquencies, you MAY be able to adopt a rule stating the member shall pay all collection costs and fees. Generally this is stated in state law under "assessment lien". If that is the case then you really don't need to amend your docs to put it in there.

4) If the board does not have a collection policy that they follow, I would strongly suggest adopting one. Mail it to every member of the assn with notification that it will be enforced to the letter. Also the board may want to start budgeting for bad debts. There will be instances when a foreclosure occurs and the assn will not be able to collect one sent from the member. The delinquent amount will have to be written off as a bad debt. You can't squeeze blood from a turnip! By budgeting for this you can prevent a shortfall from occuring in your operating fund.

JeffT (Maryland)
Posts: 83

Posted:

If the attorney does not collect he does not charge. But any external (court, etc) fees could cost the association if not collected in the end. But so far that is just lien filing charges. I see on the monthly finance reports charges for around $50 sometimes, but he has collected a lot and has set people up on payment plans.

Just another option. You always have the option to stop the lawyer from doing something if it going to cost too much.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Jeff,
Have you checked the new state statutes for Maryland? I know recently on this site there was some posting about new laws in Maryland. You might try and use search site here or Google Marland Homeowners associations.

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