Posting Names of collection accounts in HOA

Mark,
Here's the deal, as a member of the Board you should have loftier goals than trying to shame someone. If you lien the property in any way and it is recorded in the court house and becomes public record you MIGHT be able to post their names. I would not with out consulting your attorney. If the property is upside down and there are no funds to recover, do you suppose sending them to debtors prison will be successful? However they created the debt they are responsible and you are right about that. It has been suggested that it is more productive to turn this debt over to a collection agency and pay someone to get as much as they can. However with the economic climate being as it is this may bring minimal reward and you have to be very careful about states laws and if I recall CA is very specific as to procedural rules to follow. If someone has not paid in five years a lot of what I am saying don't apply and I certainly would pursue a collection company attempt, according to state law and if you can get leverage by liening the property, do it.

I think success in this problem, if what we see on this site is reflective, you will be successful if you get any money at all.

Mark,

Rather then publishing the names, I would suggest an article on the reasons to pay. Follow that with an article identifing the procedures and consequences for non-payment.

If the perception is that nothing is done to you if you don't pay then change the perception by following your associations procedures for non-payment. Make sure you apply it to everyone equally vs. singling out an individual.

Tim

I would strongly recommend you don't go posting names of deadbeats on any walls or community bulletin boards.

Besides, if these people are that far behind on their association fees, and are upside down on their mortgages, I don't think "shame" enters into the equation.

Please contact someone well-versed in California debt-collection practices.

You don't have to sit around and wait for a property to sell (to recover from the lien), nor do you have to post names.

What you do have to do is engage in a more pro-active collection policy that falls within the allowable scope of your governing documents and state law.

The residents will spread the word that they can get away with not paying as long as the board sits on its hands or throws them up in the air and thinks it has only those two choices you mentioned, liens and Scarlett Lettering.

There are a whole range of other options, but the best place to find out what those are would be with some local experts in that area. Contact other local HOAs, contact local HOA attorneys, and even contact local project management companies and ask them what their policies and procedures are.

It's not completely hopeless.

Glen, Thank you very much for your research. I have heard our PM talk about the Davis Sterling act but have not seen it printed. I will bring it up in our next Executive session next week and see what the other BODs think about it.

I am really impressed at this site. It is great to have a place that we can share information. I have noticed that our PM company does not share info unless we really press them for it. I asked for the collection stats on the company they want to use to go after our old accounts and they say they are unable to provide them. They also said that they use them regularly. They are a large company in Ca. so they should have no problem sharing this info. Am I crazy to ask this question?

No they should be able to provide the stats. Now davis-stirling.com is different from the Davis-Stirling Act; it is a website that explains the act. Also be aware CA is a single action state.

Single or One Action Rule

California has a "single action rule" (or "one action rule"), which requires those seeking to collect a debt to ultimately select one collection method against a delinquent owner. If an association forecloses on an owner and discovers there is no equity in the property, the association cannot then bring a lawsuit to recover the deficiency.

Associations may start more than one collection effort but ultimately select one remedy. For example, associations may lien a unit and initiate foreclosure and may simultaneously file a lawsuit to recover unpaid assessments. Civil Code §1367.4(b). However, at some point the association must elect its remedy. If the foreclosure results in a sale, the association must dismiss the lawsuit. If the lawsuit results in a judgment, the association must stop the foreclosure and release the lien.

If the association wants to foreclose but also wants a deficiency judgment, it must pursue judicial foreclosure rather than non-judicial foreclosure. However, a deficiency judgment may have no value if it is uncollectable. Board should consult with legal counsel on the best course to follow.

Robert, you beat me to it. I was going to caution Mark about discussing this issue in ES. As it turns out, it would be a violation of state law to meet in ES to discuss whether or not to make available to the members of the assn a list of all delinquent members.

Here is the applicable statute from the Davis-Stirling Act:

Civil Code §1363.05. Open Meeting Act

(a) This section shall be known and may be cited as the Common Interest Development Open Meeting Act.

(b) Any member of the association may attend meetings of the board of directors of the association, except when the board adjourns to executive session to consider litigation, matters relating to the formation of contracts with third parties, member discipline, personnel matters, or to meet with a member, upon the member's request, regarding the member's payment of assessments, as specified in Section 1367 or 1367.1. The board of directors of the association shall meet in executive session, if requested by a member who may be subject to a fine, penalty, or other form of discipline, and the member shall be entitled to attend the executive session.

(c) Any matter discussed in executive session shall be generally noted in the minutes of the immediately following meeting that is open to the entire membership.

(d) The minutes, minutes proposed for adoption that are marked to indicate draft status, or a summary of the minutes, of any meeting of the board of directors of an association, other than an executive session, shall be available to members within 30 days of the meeting. The minutes, proposed minutes, or summary minutes shall be distributed to any member of the association upon request and upon reimbursement of the association's costs for making that distribution.

(e) Members of the association shall be notified in writing at the time that the pro forma budget required in Section 1365 is distributed, or at the time of any general mailing to the entire membership of the association, of their right to have copies of the minutes of meetings of the board of directors, and how and where those minutes may be obtained.

(f) Unless the time and place of meeting is fixed by the bylaws, or unless the bylaws provide for a longer period of notice, members shall be given notice of the time and place of a meeting as defined in subdivision (j), except for an emergency meeting, at least four days prior to the meeting. Notice shall be given by posting the notice in a prominent place or places within the common area and by mail to any owner who had requested notification of board meetings by mail, at the address requested by the owner. Notice may also be given, by mail or delivery of the notice to each unit in the development or by newsletter or similar means of communication. The notice shall contain the agenda for the meeting.

(g) An emergency meeting of the board may be called by the president of the association, or by any two members of the governing body other than the president, if there are circumstances that could not have been reasonably foreseen which require immediate attention and possible action by the board, and which of necessity make it impracticable to provide notice as required by this section.

(h) The board of directors of the association shall permit any member of the association to speak at any meeting of the association or the board of directors, except for meetings of the board held in executive session. A reasonable time limit for all members of the association to speak to the board of directors or before a meeting of the association shall be established by the board of directors.

(i)

(1) Except as described in paragraphs (2) to (4), inclusive, the board of directors of the association may not discuss or take action on any item at a nonemergency meeting unless the item was placed on the agenda included in the notice that was posted and distributed pursuant to subdivision (f). This subdivision does not prohibit a resident who is not a member of the board from speaking on issues not on the agenda.

(2) Notwithstanding paragraph (1), a member of the board of directors, a managing agent or other agent of the board of directors, or a member of the staff of the board of directors, may do any of the following:

(A) Briefly respond to statements made or questions posed by a person speaking at a meeting as described in subdivision (h).

(B) Ask a question for clarification, make a brief announcement, or make a brief report on his or her own activities, whether in response to questions posed by a member of the association or based upon his or her own initiative.

(3) Notwithstanding paragraph (1), the board of directors or a member of the board of directors, subject to rules or procedures of the board of directors, may do any of the following:

(A) Provide a reference to, or provide other resources for factual information to, its managing agent or other agents or staff.

(B) Request its managing agent or other agents or staff to report back to the board of directors at a subsequent meeting concerning any matter, or take action to direct its managing agent or other agents or staff to place a matter of business on a future agenda.

(C) Direct its managing agent or other agents or staff to perform administrative tasks that are necessary to carry out this subdivision.

(4)

(A) Notwithstanding paragraph (1), the board of directors may take action on any item of business not appearing on the agenda posted and distributed pursuant to subdivision (f) under any of the following conditions:

(i) Upon a determination made by a majority of the board of directors present at the meeting that an emergency situation exists. An emergency situation exists if there are circumstances that could not have been reasonably foreseen by the board, that require immediate attention and possible action by the board, and that, of necessity, make it impracticable to provide notice.

(ii) Upon a determination made by the board by a vote of two-thirds of the members present at the meeting, or, if less than two-thirds of total membership of the board is present at the meeting, by a unanimous vote of the members present, that there is a need to take immediate action and that the need for action came to the attention of the board after the agenda was posted and distributed pursuant to subdivision (f).

(iii) The item appeared on an agenda that was posted and distributed pursuant to subdivision (f) for a prior meeting of the board of directors that occurred not more than 30 calendar days before the date that action is taken on the item and, at the prior meeting, action on the item was continued to the meeting at which the action is taken.

(B) Before discussing any item pursuant to this paragraph, the board of directors shall openly identify the item to the members in attendance at the meeting.

(j) As used in this section, "meeting" includes any congregation of a majority of the members of the board at the same time and place to hear, discuss, or deliberate upon any item of business scheduled to be heard by the board, except those matters that may be discussed in executive session.

Thank you for the solid advice. You are correct on all counts. I understand your business analogy but in our case we are all equal partners in the Business. If they do not pay the other partners and myself have to pay for them.

Good points. I will adjust my post and not call them what I think they are.

Mark,

Frankly I wouldn't even state the unit number or address as Dennis has suggested. What if the accountant made a mistake or perhaps the check got lost in the mail and a particular member really isn't delinquent? The assn could have a potential lawsuit on their hands. IMO, the only thing the members need to know is how many units are delinquent and the total amount of delinquencies and that proper measures are being taken to collect. Any other info is not necessary. To want to "shame" someone into paying is not the proper procedure. Some people "can't" be shamed and others just shouldn't be. Not knowing what the circumstances are for the nonpayment is one big reason for not giving out names of delinquent members.

Mark,

I think the first item of business is for the BOD to adopt a collection policy that thoroughly outlines the steps that will be taken to collect delinquencies, i.e. what happens after 1,2,3 months delinquent. If the account is sent to an attorney for collection, including just demand letters, there will be a cost that the member will be resp for. Include those costs in the policy together with any cost levied by the HOA. After the policy is adopted send it to all members of the assn with a letter stating the policy will strictly adhered to. Those members that are thousands of dollars in arrears will have several months to pay up or face one or more of the options you've outlined.

With regard to garnishment of wages I believe you have to go to court for a hearing regarding the members financial condidion, (I forget what it's called, but there is a name for it)and the court may order the garnishment. Since you mention an attorney, perhaps you should turn over some of the really bad cases to him for collection. Our attorney does a very thorough credit check on each client we turn over and from there a determination is made regarding the proper action to take. Oftentimes just a demand letter from an attorney will cause some people to pay up.

Bottom line: It's way past time for your board to get tough on collections. Letting a member become 3 - 4 years delinquent with no action from the board is really bad. It's actually cause for removal of board members as they definitely are shirking their fiduciary resp. to the assn. It's not the same as disregarding CCR violations; it's a lot worse!!

I think that waiving late fees at the discretion of the board leaves the board in a precarious position. Everyone thinks that their "special situation" deserves a waiver of late fees We do not waive late for for homeowners who have not paid for months I have explained to them that late fees are there for a reason and that if there were no consequences for not paying on time then everyone would just pay what they wanted when they wanted and we might be left without enough money to pay our bills. They have gotten angry about not having their late fees waived and threatened to "take me down" or cursed the board with bad karma for the rest of our lives but they ended up paying them and have not let their accounts get behind again. I think that if they managed to get their late fees waived then they would think that they could just manage to get them waived again the next time some "special situation" came up.We have now sent a letter out to all homeowners stating "late fees will not be waived no exceptions" so that they know ahead of time they cannot get out of them if they don't pay on time and harrassment or threats to the board will be pointless

To all,
I think most will agree we have had this conversation before. It always comes back to this (or some position resembling the last two posts).
Helen's position is the Board CAN NOT make an exception, there is no provision that allow for exemptions. She is right.

Mary say's the Board has to use good business judgement, the Board has to consider this when deciding what to do. Mary is right.

Next will be, well, the Board should decide who gets a break and only allow for those special considerations.

Then, next will be, do not charge any late fees at all, just be glad you got some money.

One guy sitting next to another in a bar says, "The drunker I sit here the longer I get."

The other guy says, "Yeah, me too."

I'm sticking to my original opinion based on the homeowners that I have to deal with When the board decides to pick and choose who has to pay late fees and who doesn't they will subject themselves to accusations of unequal treatment. And hardship just isn't what it used to be. I have seen homeowners that claim to have financial hardship still manage to pay for their internet access, their cell phone, their extended cable TV, their barbecued steak dinners and their weekly trips to the local casino, while board members trim hedges and mow lawns to compensate for lack of funds coming in

PS. He paid a $50 late fee that month.

Mary If he knew ahead of time that their would be no exceptions on waiving late fees, he would have just paid them again as he had done in the past. This is an extreme situation but where do you draw the line? How do you tell a homeowner even though we have waived late fees for other homeowners, we do not feel that your reason is good enough? What if someone came and said I lost my job and can't pay my dues right now,I will pay when I get back on my feet? Sounds reasonable. Even though other homeowner lose their jobs and still pay their dues. Okay you the board agree to waive late fees. Then 5 more homeowners show up and ask to have their late fees waived because they lost their jobs. Same reason. Then 10 more people show up and say they have lost their jobs. Same reason. In this economy it could happen. Now you have 16 homeowners that are going to pay when they can and do not have to pay any late fees. What you basically have done is given all these people an interest free loan at the expense of the rest of the homeowners. Now the rest of the homeowners (the ones still paying their dues) will either have to do without some of the things that all the dues should be paying for or pay more. Is that really fair to the other homeowners who still pay their dues. And the reason for this is because the board wants to feel as though they have a heart? If the board wants to feel as though they have a heart they should volunteer at a local charity. Association are businesses and should be run as such.

I have to disagree. It does have something to do with waiving the late fees. If there are no consequences (late fees) then making the dues payments will be put at the bottom of the priority list. And I still did not get an answer as to where you draw the line or how you tell some homeowners their reason is not good enough. As long as there is a chance to get late fees waived, some homeowners will always have confidence in their ability to get their late fees waived,either by making the board feel sorry for them or resorting to threats. I have even had 2 homeowners who got several months behind tell me that they saw the late charges on the statement they received from the bookeeper but they did not understand what they were. And since I did not personally come to them and explain what the late charge was, then they should not have to pay them. Late charge. Buy a dictionary.

Glen is right on the money with this. We have the same problems. Our attorney recommended us the same thing. I live in Florida. The Board of Directors is allowed to post delinquent members e.g. in the meeting minutes, because those are for "Members Only". Now posting those names on a public board or in the newsletter can bee a dangerous thing.

Some may argue that this information is already public record, and if something is public record, everybody can see it anyways, but as I stated before, our attorney said the same thing ... stay away from posting names on anything that can be seen by anybody outside the membership.

The members are allowed to see it, because basically what an Association is, is a number of Shareholders, in principal nothing else than when you own shares to a publicly traded company. All share holders have common interests and rights. One of the rights is to see the books. So since you have the right to see the books (and that includes EVERYTHING), you can do your own research and find out who is paying what and when and who isn't.

So my suggestion is post it in the meeting minutes of your monthly association meetings (if you have those). And like others recommended already, consult an attorney who is knowledgeable about your local laws.

Cheers
Karl

Helen,

I don't think there is anything I can say to make you change your mind. You don't seem to understand that only nonpayment of the assessments puts an undue burden on all the other members of the assn. Late fees have no (or "should" have no) bearing on the budget. If a member doesn't have a valid reason for wanting the late fees waived then the BOD just say's "no"! Plain and simple. Also, waiving late fees is not something the BOD advertises. My assn has 1,702 members and many delinquencies each quarter but I've never heard of a member asking to have the late fees waived. Even the member I spoke of in my last message didn't ask to have the late fees waived. This was a decision the BOD came to in discussing his situation with him.