What to do after a Lien is filed

I was the President the first year the Developer turned the Association over to us with Zero funds so 2010 was not the best of years. 2011 can and went and we have 5 families that are not paying their Association dues. We are a small Association in East Tennessee with 44 homes and 16 lots and can not afford to let people stop paying. I understand the people are hurting financially but the rest of us have to pick up the slack and our dues remain high. I am now the Treasurer this year and want to make sure we are doing everything possible to collect the past dues. We hae filed liens on 3 of the 5 families and are ready to file the other two. What are other Acssociation doing about collecting on families that are not paying?

Brucene, unfortunately there is not much you can do after you file a lien. Lien is a non aggressive way of collecting money owned to you when a property is sold or refinances. You could proceed to foreclosure but you have to do you homework and be very careful. Depending on market conditions and the amount of senior liens (those that are filed before you - typically first and second mortgage) it may not make sense to foreclose.

I also recommend following other venues of collecting. If you go to small claims court and win a judgement you can try to collect it by going after a person individually. It's not easy and not always possible, but may give you additional chances over just sitting and waiting for your property lien.

With only 5 non-paying owners, has anyone tried talking to these people to find out why they are not paying? Are they unable to pay or do they just want a free ride? Having been on the receiving end of collections in my younger years, I know from experience that letters from creditors go into the trash without being opened. Work with those who are willing to pay but cannot. You are better off collecting 50 percent of something than 100 percent of nothing.

Your board should write its budget on the assumption that at least fifteen percent of the owners will fail to pay their assessments. No organization collects 100% of what is owed. Even the IRS -- who can put you in jail and just ruin your life forever -- does not collect all that is owed. There is no reason why you should expect to collect everything.

Before filing liens and lawsuits and foreclosures remember that most collection activities will require payment of some kind. This means that you will be taking real cash from your assets to chase money that you have little chance of collecting. I compare this to a person who spends the family grocery money on lottery tickets -- they may win but are far more likely to lose their entire investment.

My HOA is in the same boat - we have 4 current owners with liens on their property for non-payment of dues. When a lien is filed, my understanding is all the HOA can do is sit back and wait for the property to be sold, and hope for a payoff at that time. I'm a new Board member and have a related question:

Can the Board, AFTER a lien has been filed, ALSO take the owner to small claims court? Thus there would be 2 cases against the owner assuming the Board wins the Small Claims case. My thinking is the Small Claims case would cost very little to file and get processed since no attorney is involved, and the judgment could be pursued immediately via wage garnishment, asset seizure, etc.

Thoughts?