Can we add a % to dues to account for delinquencies?

Our small association (in California) has 12 units. 4 owners are delinquent on their monthly dues at this time. We anticipate even more delinquencies as the dues will have to go up next year (New Reserve Study completed, updated budget). The delinquent amount for 2006 is approximately 10% of our annual income.

We have a new accountant who will be vigorously pursuing the delinquent dues. Meanwhile, can we add a 10% increase to the dues to cover current & future delinquencies which we anticipate?

Thanks so much for any information you might have.

Dawn

LATE FEES & INTEREST

As provided for in Civ.Code 1366(e), regular and special assessments are delinquent 15 days after they become due, unless the declaration provides a longer time period. If an assessment is delinquent, the association may recover all of the following:
1. A late charge not exceeding 10 percent of the delinquent assessment or $10.00, whichever is greater, unless the declaration specifies a late charge in a smaller amount.

2. Interest on all sums imposed in accordance with this section, including the delinquent assessments, reasonable fees and costs of collection, and reasonable attorney's fees, at an annual interest rate not to exceed 12 percent, commencing 30 days after the assessment becomes due, unless the declaration specifies the recovery of interest at a rate of a lesser amount, in which case the lesser rate of interest shall apply.

3. Reasonable attorneys' fees and costs incurred in collecting the delinquent assessment.

Check out www.davis-stirling.com for more information. Click on topics. It's alphabetical.

I appreciate your responses.

I agree - does not at all seem fair that some people would have to pay twice just because others are financially irresponsible.

Thanks so much for helping me think this one through.

Dawn

BrianB,

There can be instances where charging other members is a neccessity, not a choice. And I agree, I would be p***ed if it happened in our HOA too, but it IS coming soon because of the way we recieve water/sewer services. This is just an "example", but it is also a TRUE example:

Our community has a private utility on site that provides water/sewer for 86 homes, (96 lots). The developer we all purchased from is the owner, (through a different company name), of the utility. He provides the community water/sewer at a "bulk rate", otherwise, an assessed amount for each property divided equally regardless of usage. (Vacant lots excepted.) All members pay our utilities through our HOA fees, $40. for water/sewer and $10. for a maintenance fee. As you can see, our water/sewer rate is VERY LOW by doing it that way. We have many older, retired, fixed income folks that this really benefits.

NOW, if someone doesn't pay their fees, the BULK WATER/SEWER BILL STILL COMES and HAS to be PAID! The other members end up paying for the delinquent owner since the bill from the utility is to the HOA, and NOT "individuals". And YES, the HOA does the notices, collection agency etc...HOWEVER, if DESPITE all that they don't pay anyway for whatever reason; The bulk bill STILL arrives and needs to be PAID in full each month!

The only cure? Have water meters installed for each property...a costly venture for the owners. Then individual water bills to each owner which will include the costs of the billing system, collections, meter installations etc...it is estimated to be $80. to $125. per month. MUCH more than the $40. we're paying now.

The situation I see is that other owners can exert some degree of "peer pressure" upon the delinquent accounts. Afterall, EVERYONE has to PAY for the one or two DEADBEATS and that isn't "right". After a few dozen cold shoulders, they usually pay up or a FOR SALE sign grows in their front yard....as it should! ;-)

Claude, i definately understand that situation. In essence, that still applies to every HOA, because there are expenses (landscaping, insurance, postage, etc.) that must be paid, and if folks are stealing from their neighbors (by not paying their dues), then the honest folks will end up paying more to cover those costs. I just think it is a horrible idea for a board to think "hey, this is a possible way to get more money.. let's charge the folks who DO pay more..." when the board should be doing their job and getting the theives who are stealing from the HOA to stop, and pay up.

It depends on your state's laws on what can be done. In Ohio we hired a collection attorney. On top of the money owed our HOA the attorney collects fees from the delinquent homeowner such as: An attorney’s fee of 50% of all amounts due the Condominium Association, including past and future condominium fees, assessments, late charges, lien fees, and court costs will be assessed until the unit owner’s account is brought current. In the event that payment is not expeditiously made, this office will file a foreclosure which unfortunately, increases the amount of court costs that the unit owner is required to pay. In addition, in a foreclosure, the unit owner is also subject to an additional assessment for the reasonable rental value of the condominium unit.

Wait just a minute here folks are you running your HOA like a business or a welfare state. Its bad enough that the govt wants to redistribute our money to the non workers of the country. But you better change your way of thinking cause its totally wrong!!!

You have been entrusted by your fellow home owners to run your little nation. Start acting like it. This is not a welfare state your running if you are then get off the BOD cause here in florida were we are you can do a lot more than you have been led to believe.

First of all now remember I speak only of Florida cause thats were I live, have 2 businessess and run a Christmas Light show for my church of 850,000 lights last year and we bump it bigger this year.

First thing in Florida you have the right as a Incorporated HOA to place LIENS on houses and foreclose them. It is 1 of the very few states that allow HOA's and Condo Assoc to do that.You cannot attach-garnishee wages or income correct. But you can LIEN them, foreclose on them, take possession of them. Rent them out at a profit, resell them. Or knock them down and make them into playgrounds, parking lots what ever your BOD and CCR allows. Remember 99.99 % of the docs on a HOA were written by a developer and he/she wrote them to protect the developer or personnel in charge. That being totally understood and the BOD needs to severe all niave thoughts about being nice guys and gals you better realize that you have a Fiduciary Responseibility under Florida Law to obey all laws in your own ccr's and your SOPs as well as Roberts Rules of Order. I qoute from SEC 720 of the rules and regs of the florida statues governing hoas only.

We have for over 18 years LIENED homes ( We are a 307 unit HOA in Broward County) sold them at public auction by the county sheriff. Foreclosed on homes. Live with a set of Docs that was dropped on us by our developer at change over.

Wanna see shock watch 6 representatives of the hugest developer in the entire nation get up from the table and say the assoc is yours now you have voted in your own BOD and they say nothing and leave. Then you find out the developer was the management co and the bond the city requested them to have on a sprinkler system was never acted upon 2 years later you get $8000 to set up a system and the lawyers get 40 percent of it. Yea running a HOA is really fun I must watch out for my friends while they run a service station from their driveway. Yea people love you so much you must watch out for them so much as they paint there house purple and you tell them they cant and they say to hell with you!Then the next month they loose there home to a 1 year unpaid mortgage and the values of a entire block go thru the floor.

Then of course there are the people you send to collection cause they have not paid there monthly's in 6 months and they come to your front door with there 3 kids crying about they aint got no money right after they step out of a brand new Lincoln Town Car value $54000 dollars. Yes I should feel sorry for them sorry your wrong.

Or the people who put up a screen room without a permit or approval from the ARC on the rear of there home they sell there house and they want you to help them get around no permit no nothing and they got caught by the prospective home buyers inspector as haveing a illegal structure on their land/home. So you shut down your business for 2 days walk thru a permit to help them get it approved and so forth. As a thank you as they leave they leave on the sidewalk a half of a truck of refuse for you to get removed at the expense of the hoa cause they were too tired to drive to the next hoa to help make it into a pig pen.....

Or how about the time we discovered the developer had left behind 85 15 cubic yard truck loads of tires buried under the community in a drainage depression area and the dev says I dont know where it came from and we do 4 weeks of research and find an aerial photo of the developer planting the tires under this area. Soo you sue and hire the best law firm that money can buy. He sets it up that instead of 1 community its 307 individuals he is sueing for so he gets 40percent of each case.Plus he wins a judgement that everything uncovered about the developer is hidden for ever for which the law firm gets 15000 bucks a quater for 8 years. Finally the individual home owners get there checks and the lawyers put in a codesill that we cannot force homeowners to fix the rotten siding on there homes. No mention is made of the tires in the settlement. The people take there checks many buy new cars dump there homes and leave. Then you got the 125 owners who refused to join the suit go to court and get a jusgement that the hoa must give them part of the money settlement. Oh yes I must worry about my neighbors, who stop you in the street when you walk your dog abd want to know whats going on with the assoc board its like all of a sudden you are the bad guys and they are all innocent of wrong doing then they finally show up at a meeting and demand that you listen to their problems before you handle assoc business. Why simple they gotta get home to the TV set cause their time is far more important than yours is...............

Some people I love they maintain their home they pay their money they make life a pleasure then you have people who move in from a ghetto atomosphere and bring that mentality with them.................Yuk. All I can say in closing is if your on a BOD run it like a business not a card party. cause folks you are the govt of your HOA act like it not like professional politicans.....

Claude

in reading these statutes, nothing seems to prohibit the placement of a lien for assessments...

http://www.flsenate.gov/Statutes/index.cfm?App_mode=Display_Statute&URL=Ch0720/ch0720.htm

however, they do prohibit a lien for FINES...

Also, theses laws seem to allow a lien to be placed on a home after any judgement

http://www.sunbiz.org/corpweb/inquiry/jlien_how_to.html

so i can't see that Florida has outlawed it... just made it more difficult than it used to be, and narrowed the ability somewhat.

granted, i only skimmed the statutes...

it's sad, but all those fees you had to add could potentially be added to the lien and collected. I use that fact as incentive when i talk to people about paying up their dues... don't force us to court, because then, we will add $$$$ to the case, and you will have to pay them.

in general, people understand that since they signed a contract saying they would pay their dues, that any court is going to ultimately hold them accountable to that. And holding them accountable means the court will also add all the costs and pain that were required to collect.

Dues, not fees...

that's the problem Claude, the legislature has had too many horror stories of HOA Fascists running up thousands in fines, fine fees, failure to pay fine fees, etc. for trashcans on the curb after 4 pm, paint color a shade off white, etc., they will not allow such things to go into thousands of dollars and court costs.

However, they do stand behind the assessment contracts, those things agreed to in the deeds to pay for the HOA itself (common areas, landscape, insurance, etc...), which we roll together into "dues" or annual assessments.

So, HOA's can still collect the money they are due for the HOA itself "relatively easily", but have a more difficult time collecting on fines and penalties for non compliance.

Beth can correct me, if necessary, but you can't foreclose for fines in California, no matter what they are called.

Get in touch with LIENCO Broward and they will handle it for you. He is also a lawyer. His name is Irv Nachman. Mention my name Jack Murphy Hampshire Homes HOA Miramar Florida