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DeniseG (Colorado)
Posts: 9
Posted:
There are several units in our HOA who are extremely delinquent in their HOA dues. We have placed liens on their units but they have still not paid. Any suggestions? It is at the point where we are unable to pay our water and trash bills.

Denise
RobertR1 (South Carolina)
Posts: 5,164
Posted:
Denise,
This problem is becoming more common and we have received many posts about it. Check the current Discussion Board for active postings on this and you can also use the search feature at top op this page. They just put in a new LARGE search button which make it much easier and noticeable. Thank you Hoatalk and I am glad to see you fixed the little glitch.
MaryA1 (Arizona)
Posts: 7,043
Posted:
Denise,

The BOD should take a close look at their collection policy. Perhaps too much time is being given to the member before legal action is taken to collect delinquencies. Also, if any of these properties are in bank foreclosure the assn may never be able to collect. To account for these uncollectible delinquencies many assn's are including a bad debts line item in the budget. Also, the BOD may just have to raise the assessments if enough delinquencies are uncollectible and the BOD is having difficulty in meeting their obligations. It may not seem fair, but it all boils down to the members who pay on time having to "subsidize" those who don't!
RogerB (Colorado)
Posts: 5,067
Posted:
Denise,
1) have reasonable Rules and Regulations on collection of delinquent accounts which have been provided to every homeowner.

2) develop sound proceedures for collection. For those currently "extremely delinquent accounts" did you advise them 30 days in advance of placing a lien on their property? Did you provide them a copy of the lien?

3) I would send a letter giving them 10 days to make arrangements with the Board for a repayment schedule. That letter would advise them that after 10 days their account would be turned over to an attorney for collection (provided your Declaration of CC&Rs allows garnishment and/or forclosure). Note that such action will significantly increase their cost since the HOA will request the defendant to pay their legal costs if the case goes to litigation.

4) If this fails to bring desired results it is time for an attorney. Before hiring an attorney I would talk with the HOA's insurance company. Also, some attorneys will accept a delinquent account and require payment after the collection process is completed. However be aware that the HOA may be responsible for legal expenses if the attorney does not win or does not get their fees paid by the plaintif.
GraceH (Virginia)
Posts: 224
Posted:
Denise,

I commend you and your board for placing those liens.
PeterB1 (Florida)
Posts: 257
Posted:
The lien really doesn't help you collect. Look at the lien as an insurance policy - if everything else fails, someday you will get your money.

Have you tried a collections agency?
RobertR1 (South Carolina)
Posts: 5,164
Posted:
Denise,
The part of your question that deals with being unable to pay association bills.

We really need to know what we are talking about. How big is your HOA/condo, what are your assessments, do you have a bank account, how many units, etc, etc, etc.

Try and be complete with the reasons and figures you provide. Use the same rational and post it that made you make the statement in the first post.
BrookeB (Georgia)
Posts: 4
Posted:
Have you reviewed your covenants to ensure there isn't a section that allows you to disconnect water paid on those units' behalf? My community is going through the same situation. Oddly enough we are towhomes and single families, and we are all on one central meter because the developer never changed the structure from when the land was a large apartment complex. She was also an absentee BOD from the community's inception and allowed our HOA to reach nearly 90K in arrears (HOA dues). Our covenants allow for any utilities paid on a homeowner's behalf to be disconnected if they are more than 60 days late on HOA dues. We were able to pressure the developer into turning the HOA over to the hoemwoners, and collecting on the money owed is the first course of action. We will be sending out notices this week. It's our only recourse. Liens are not motivators for people to pay. If your covenants don't allow you to disconnect their water and trash, I strongly urge you to rewrite them and file the amendments with the appropriate parties.
MaryA1 (Arizona)
Posts: 7,043
Posted:
Brooke,

Are you saying all the single family homes are on the same water meter? I find this extremely unusual!!
RobertR1 (South Carolina)
Posts: 5,164
Posted:
Welcome to the site Brooke.
Your post shows considerable knowledge and all things being equal you are probably right about about the need for some covenants to be rewritten that lack some kind of collection procedures and I am sure you know how difficult that could be.

I am also interested in why you pressured the developer to turn over the HOA/condos (???) with 90K of debt.

This can be a tough place but we all (?) mean well, so welcome again.
BrookeB (Georgia)
Posts: 4
Posted:
@Denise, yes, it's a very unusual set up. Those of us in the single family homes were very upset about this information not being disclosed to us. You never imagine that being on your list of questions you need to ask. The developer was more concerned about saving money than giving single family homes their own individual meters. From what we've been able to learn it would have been an expense of more than 1M.

@Robert. From what I hear, covenants can be difficult to amend but it seems to be something that Mary may want to look into. As far as why we pressured the developer for control even with so much money being owed in dues.....we had no other choice than to get control of the HOA. She is no longer in business and from what we found out no longer even living in the state. She was never really an active board because she never enforced anything. She sat back and let it happen instead of forcing delinquent homeowners to pay. My subdivision is only 4 years old. There are people that bought in Phase 1 and have never paid dues. She's done nothing about it outside of placing liens, which mean nothing. Those of us that do pay felt hostage to this woman. We've been threatened with water disconnections every month these past few months. It was even turned off for one day and our street lights were turned off for a week because there was no money to pay the bill. After having no water for a day and living in complete darkness for a week, we had to do something. Our our only option was get control of the HOA and take action or face losing water and having to walk away from our homes. Thankfully our covenants are already written to allow us to immediately take action, which we will be doing this week now that a new Board is in place (I sit on the Board). Notices will be mailed this week giving people 10 days to pay or their water will be disconnected. Of the 236 homes in my subdivision, 133 are delinquent in some fashion.
JudyM5 (Ohio)
Posts: 36
Posted:
You might want to check with the HOA's attorney to see if it's ok to turn off someone's water since all the houses are on one meter. Even though your CC&R's say that you can do that, I'm not sure that the Health Department would agree and you might end up with a bigger problem on your hands than you've got now! One of my communities wanted to install external lock-out water shut-offs in each of the condo units to accomplish the same thing. They were told by their attorney that they could not do that because of health and sanitation issues.

Also check your CC&R's to see what it says about an end-of-year deficit. Does it say that if there is a deficit in the budget at the end of December, that all owners in the association must bear their proportional share of that deficit in the form of a special assessment? If so, you might have to exercise that option. If you can't pay your bills now, you don't have much choice but to put a special assessment in place for all the owners . . . even for the ones not paying . . . it just adds on to their unpaid balance.
BrookeB (Georgia)
Posts: 4
Posted:
@Judy, trust me, we've done our due diligence. Our attorney fully supports these efforts. The Health Department is more concerned about an entire community being without water than people who do not pay their bills. And that is what we have been faced with. If we had individual meters and the homeowners didn't pay their water bill, the city would turn their water off. So this is no different. The HOA pays the water on their behalf. We've been to city council meetings, we've done everything we know to do. This is our only resort to collect on over 50% of the community that does not pay. Even though there is one meter, you can cut off water to individual homes, and we've purchased tamper resistent locks to prevent them from turning it back on. Again, it's either turn the individuals off or everyone be off. And the latter is not an option, but it's what we face if we don't take action to collect the money.

Our docs don't state anything about a year end deficit. But even if it did, imposing a special assessment is not going to be effective when you have people that already owe thousands. We don't care about adding to a balance of someone who doesn't pay. We need their money right now.
GraceH (Virginia)
Posts: 224
Posted:
Brooke,

Be diligent to ensue the Association does it properly. Ours can shut the water off for non payment, however, the Homeowners are entitled to a hearing first. If it is not mentioned in you documents, check the State Statutes. Although the non payers are not following the rules, the Association must or it can backfire.
BrookeB (Georgia)
Posts: 4
Posted:
@Grace. We have done our due diligence. Our attorney has given us the green light. We don't even have to give notice, but we are as a courtesy.
GraceH (Virginia)
Posts: 224
Posted:
Cool beans.
Although your Association is in financial trouble, it is good to read that they are doing things on the up and up.

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