putting COA fee in escrow

An owner was fined for a violation and refuses to pay the fine. The owner is threatening to put her COA fee in escrow until the fine is removed from her account. Has had ample opportunity to meet with the board to discuss the issue or to put it in writing for the boards consideration but won't do that. Does anyone know if that can be legally done ? Has anyone delt with that type of situation before ?

Not so fast.

While there is some truth to what Jon has posted, life isn't always so simple.

First, before you can foreclose, you need to file a lien on the property. The lien doesn't get you any money until the property is sold. You can force a sale by foreclosing, but once you have done that, be prepared to stand in line. Liens are settled out of the sale proceeds in order of priority. Priority is usually assigned in order according to when the liens were filed, which usually means the the holder of a first mortgage has first priority (except for tax liens). Generally, if you decide to foreclose, you will need to foreclose not just for the amount owed you, but for an amount that also includes all liens with a higher priority than yours so that they will be paid. The exception might be if state law grants HOAs (and COAs) a higher priority (sometimes called a super lien).

Then, there's the issue of the fines. Do the governing documents permit fines? If so, were the fines levied in accordance with the governing documents and state law?

The COA might prevail in the end, but it could be a messy (and costly) process to get there.

In my opinion, If the Assessment isn't received you follow the steps outlined for non-payment in the Associations governing documents. When (and if) you go to court over the lien and/or foreclosure - the other person may or may not win just as the Association may or may not win. As was pointed out, it will cost money to go through this process which will initially have to be paid by the Association.

If the Board received written notification that the assessments would be placed in escrow, then the board should respond referencing the governing documents, State law and the procedures for non-payment. Then wait and see what happens. If there is no written notification about the assessments, the board should not respond about it.

Tim

Bruce,
excellent suggestion.I can check to see if that is an Ohio state law but am not sure how you would know who the mortgage lender is for a particular owner.

Steve,
Thanks. That has normally been the case. However, ohio law now allows associations to take fines from the COA fee. If an owner doesn't pay the fine then it is paid "off the top" of the coa fee for the following month. That leaves the owner short on their COA fee, which in turn generates a late fee for not paying their COA in full. The owner then owes the fine plus a late fee.

Previously, the fine could just sit there for months while the association tried to get an owner to pay. Believe me it doesn't usually take long for them to pay up... except in the case of this lady who just now paid the inital fine but is objecting to the late fees for her COA fees not being paid in full and on time and is threatening to put her COA fees in escrow until the late fees are removed.

Fred,

Sometimes the Association has to ask themselves what the goal is. If the goal was to have the fine paid and the violation corrected, per your posting it appears that this has been done. If the only late fees were due to the Association crediting the COA payment to the fine prior to the assessment, I'd suggest working out some sort of deal.

If this is the first time it has happened with this individual, perhaps waiving all the fees with a stern warning that the Board won't waive them again.

Tim

So be it. Its her choice.

That said...... Your fine better be legal and done properly, it sounds like this one may go to court someday. If you made any mistakes along the way, you may want to waive the fine and the late fees vs going to court and loosing.

Are you sure that the accountant and property manager have done a good job explaining this charge to the HOA member? Also, if the late fee's resulted in a $25 fine being taken "off the top" of her monthly HOA fees causing a $25 shortpay and late fee windfall - how quickly was the owner notified that her HOA payment did not suffice as full payment? If Ohio law permits this "off the top" bookkeeping practice, it seems unfair to continue to assess late fee's to an owner consistently paying and not aware that payments are not being directed in the manner that one would assume (payment in full). FWIW, it seems that incessant late charges to a dependable paying owner in your community would be counterproductive - especially if the fee's are being upheld "to prove a point", like you mentioned in your prior post and they may potentially cost your HOA silly legal fees in court.