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Subject: HOA Collections
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Author Messages
ChrisJ11
(Texas)

Posts:3


11/13/2017 5:33 PM  
Our HOA has a very large amount of outstanding HOA Dues and late fees (over $300,000). Obviously, collecting these would make a huge difference to our community (our annual HOA Dues is only $295/yr). Our past board has been very slow in trying to collect, but I would like to explore establishing a Committee to actively pursue this problem. The current board believes that only board-members can access the HOA members property rolls and financial statements. Is this true? I am thinking a campaign to collect, including a 3 month "amnesty" on dues (waiving the late fees), followed by 3 months of "No Action" collections, followed by 3 months with a collection agency, followed by liens, followed by foreclosure.

Can a Committee have access to the HOA Members information to pursue late dues and fines, or can it only be done by board member State? Oh, and we are in rural Texas...
TimB4
(Virginia)

Posts:14860


11/13/2017 8:21 PM  
Chris,

Failure to pay is likely a covenant violation. Therefore, you need to follow the procedures outlined in your enforcement policy.

As Treasurer, I don't even inform the Board who is behind. If an account has to go to collections, it is referred to as the account. Summarized info is provided but never a name or lot number. This allows the board members to make a decision on sending the account to collections or not based on the facts of the account and payment history and not if it happens to be their neighbor or not.


I agree that collections effort should happen.
Expecting your Association has late fees, send an invoice showing the late fees and (with the Boards approval) the statement that the Association will waive the late fee if the account is brought current by mm/dd/yyyy (I typically give mine 30 days).

Our policy is:

30 day letter
60 day letter
90 day letter - certified/first class mail
120 day letter, notice of agenda item to determine if account should be sent to collections
Board Decision
Once it goes to collections, the attorney takes over.

It should be noted that we instruct the attorney to file a lien first thing.
MelissaP1
(Alabama)

Posts:6788


11/13/2017 8:36 PM  
I understand your frustration but your most likely not going to do anything much better than get a ball rolling. Your not as an individual member be able to collect. You may just effect some change. There is this thing called "Reality" that has to be dealt with.

When I became President we implemented a collections policy. We place a lien at 6 months behind. If still did not pay, then we CONSIDERED foreclosure at 1 year. There are many factors that go into that. One can't foreclose/lien on an ACTIVE DUTY Military person. Foreclosure does NOT make the HOA money but STOPS the bleeding. Liens/Foreclosures do cost money to pursue and time consuming.

So you may feel your HOA board isn't doing anything toward collections. Well they may have liens filed already. Those liens add up till the person sells their home. Which may take years. I've found that some HOA members are not comfortable with pursuing more aggressively with foreclosure. They don't believe in taking a house away from someone. So they will just decide to file a lien and wait it out.

You also never ever foreclose on a house that the bank already has in foreclosure. The bank gets paid first and foremost even if the HOA does the foreclosing. (A few states there is a "Super lien" situation that puts HOA on the same level as the bank). The HOA will only get the money leftover if there is any. Most likely there isn't.

I did a foreclosure in our HOA. The house stayed empty for over a year AFTER the foreclosure. No one could touch the home. There is a "Right to redemption" period where the former owner can get the home back. They just have to cough up all the money they owed plus pay for any improvements that may have been done to the home. Which someone isn't going to put that risk when purchasing a foreclosure. All their remodeling work basically goes to the toilet. That house stayed abandoned and empty altogether for nearly 3 years.

So don't go looking to take matters into your own hands. Instead I would highly recommend suggesting to your board a policy on collections. Which may be what you suggest. It also may be another way or waiting period. Collection agencies don't necessarily take on these types of collections. You need a lawyer. All of which costs money your HOA may not have to pursue the debt owed to it. If that is the case, then someone may scream "Selective enforcement" and threaten to sue. A lawsuit is the last thing you all need to collect or be involved in.

Former HOA President
GeorgeR8
(Arizona)

Posts:138


11/14/2017 4:53 AM  
Our accounting firm only handles HOAs and COAs. They have their own collection agency. Everything happens automatically until it gets to foreclosure. Then the board has to vote on it. All fees are added to the owners balance.

We have it pretty easy on this.
ChrisJ11
(Texas)

Posts:3


11/14/2017 5:40 AM  
Thanks for the feedback, but I don't think I communicated the issue properly. I am not looking to do anything on my own. The board is considering an ad hoc committee to deal with collections, but they don't know if non-board members can have access to property-owner information. The question is whether the ad hoc committee can access the information needed to pursue collections (name, contact info, payment history, etc.), or if only board members can see that information.

Also, we are a gated lake community, so there are a lot of people that buy empty lots so they can have access to the lake (we call them "membership lots"), and those are the majority of our collection issues. I don't think anybody has the desire (or the stomach) to take somebody's home away through foreclosure.

But again, the main question is whether an ad hoc committee can have the access to information needed to initiate and pursue collections.
TimB4
(Virginia)

Posts:14860


11/14/2017 6:52 AM  
Chris,

The Board can delegate as they see fit.

However, as I alluded to in my posting, I don't think anyone outside of the Treasurer and bookkeeper should have access to individual lot/unit ledgers.
SheliaH
(Indiana)

Posts:1986


11/14/2017 7:26 AM  
I agree with Tim, although when I was on my HOA board (and its treasurer for five years), everyone on our Board was aware of who was delinquent (discussing what to do with them took up a considerable part of our meetings! If you had a committee taking this on, it wouldn't be long before someone would yap to the wrong person(s) as to who was delinquent or not (because some people are incapable of keeping their mouths shut about confidential or sensitive matters), and then you could have problems with violations of the Fair Debt Collections Act (which can get VERY expensive as far as fines are concerned).

The Board is responsible for managing the Association's affairs, so it's more appropriate for it to make decisions on collection actions like who should be referred to the association attorney for collection, if a lien should be filed on a home, evaluating the effectiveness of the collection policy, etc. I realize it's not at all pleasant to sue one's neighbor or foreclose on a home, but this is one of the more difficult parts of Board membership they signed up for, so they'll just have to take some Alka-Seltzer and deal with it. It's very unfair for other homeowners to indirectly subsidize their neighbors in paying the association's bills while the deadbeats continue to reap the benefits.
DouglasK1
(Florida)

Posts:894


11/14/2017 12:04 PM  
Posted By ChrisJ11 on 11/13/2017 5:33 PM
Our HOA has a very large amount of outstanding HOA Dues and late fees (over $300,000). Obviously, collecting these would make a huge difference to our community (our annual HOA Dues is only $295/yr). Our past board has been very slow in trying to collect, but I would like to explore establishing a Committee to actively pursue this problem. The current board believes that only board-members can access the HOA members property rolls and financial statements. Is this true? I am thinking a campaign to collect, including a 3 month "amnesty" on dues (waiving the late fees), followed by 3 months of "No Action" collections, followed by 3 months with a collection agency, followed by liens, followed by foreclosure.

Can a Committee have access to the HOA Members information to pursue late dues and fines, or can it only be done by board member State? Oh, and we are in rural Texas...



Like a lot of associations, we don't publicize who is late, but unlike Tim's case, the entire board is informed. I've read that other associations go the complete opposite and resort to public shaming by letting all members know who is delinquent. It seems to me that there a couple of angles in your case:

1) does state law prohibit non-board members from access to member financials? In my state the laws don't so having a committee of non-board members would not be illegal. In fact, we are required to allow any owner to inspect all records except for a very limited set of exclusions. Those exclusions don't include member payment status, so any owner could see who was delinquent if they wanted to. Here are the only exclusions related to owners:
4. Medical records of parcel owners or community residents.
5. Social security numbers, driver license numbers, credit card numbers, electronic mailing addresses, telephone numbers, facsimile numbers, emergency contact information, any addresses for a parcel owner other than as provided for association notice requirements, and other personal identifying information of any person, excluding the person’s name, parcel designation, mailing address, and property address. ...


2) Some people are concerned with the possibility of legal liability if names of non-current owners are shared, but I'm not aware of any association that has been successfully sued for disclosing this info. Asking this question of your association attorney could be helpful too.


NigelB
(Texas)

Posts:205


11/14/2017 6:11 PM  
Posted By ChrisJ11 on 11/13/2017 5:33 PM
Our HOA has a very large amount of outstanding HOA Dues and late fees (over $300,000). Obviously, collecting these would make a huge difference to our community (our annual HOA Dues is only $295/yr). Our past board has been very slow in trying to collect, but I would like to explore establishing a Committee to actively pursue this problem. The current board believes that only board-members can access the HOA members property rolls and financial statements. Is this true? I am thinking a campaign to collect, including a 3 month "amnesty" on dues (waiving the late fees), followed by 3 months of "No Action" collections, followed by 3 months with a collection agency, followed by liens, followed by foreclosure.

Can a Committee have access to the HOA Members information to pursue late dues and fines, or can it only be done by board member State? Oh, and we are in rural Texas...





I think the board is correct that only board members are entitled to the records relating to association dues and delinquencies. My reason is as follows:

Section 209 of the Texas Property Code speaks of board meetings and Executive Sessions as follows: " Regular and special board meetings must be open to owners, subject to the right of the board to adjourn a board meeting and reconvene in closed executive session to consider actions involving personnel, pending or threatened litigation, contract negotiations, enforcement actions, confidential communications with the property owners' association's attorney, matters involving the invasion of privacy of individual owners, or matters that are to remain confidential by request of the affected parties and agreement of the board."

It would seem to me that if a board convenes in Executive Session to discuss delinquencies and identify those delinquent accounts - then only board members are privy to that information. Any disclosure to a non-board member could be considered an invasion of privacy.

Your board should develop a collection policy and stick with it, the way we do it is as follows:

1. 30 days delinquent a certified letter advising of possible consequences of non payment
2. 60 days report to credit bureau and another letter advising of action
3. 90 days lien filed at County and another letter
4. 120 days file is sent to attorney for further collection efforts
5. 6 months - possibility of filing foreclosure action
All charges associated with collection are charged to delinquent account

Section 209 of the Property Code also requires that delinquents be offered a payment plan
JohnC46
(South Carolina)

Posts:7010


11/14/2017 6:56 PM  
Chris

Typically deadbeats are going to ignore any communications from the BOD. They need some weight behind them to pay attention.

You might consider a letter from the associations lawyer offer the whatever "forgiveness" plan you decide on but also have the letter say if they do not accept the "forgiveness" and pay with say 30 days, plan then liens, foreclosures, and credit bureau reporting from the attorney will begin.

Got to slap deadbeats up along side their head.
ChrisJ11
(Texas)

Posts:3


11/14/2017 9:11 PM  
Thank you, everybody. Great info, but I guess we need to speak with the lawyer and see what our best recourse is. I just know that the current Treasurer, as well as past Treasurer's, have been lacking in their collection duties (if we have over $300K in late dues!). I appreciate the wise words...
TimB4
(Virginia)

Posts:14860


11/14/2017 11:12 PM  
Well, consider volunteering to serve as Treasurer for the purpose of collecting past due accounts.
MelissaP1
(Alabama)

Posts:6788


11/15/2017 5:15 AM  
NO you do not need to talk to the HOA lawyer. The board needs to talk to the HOA's lawyer. The HOA lawyer is NOT your lawyer. If your a board member, then it should be approved to go talk to the lawyer. In addition, it's usually recommended to have 1 POC who represent the board/HOA to communicate after approval.

It costs the HOA money for each conversation, email, or other communications to a lawyer. If your upset they aren't paying up for collections, then an expensive talk to a lawyer is taking up more funds. It can cost up to $400 or more to file a lien. Money your HOA has to have. So collections may be an expense it can't afford considering it may appear as "selective enforcement" if not all behind are served at same time. Can your HOA afford to pay out 4K for 10 people behind in dues?

Work first on a policy that best fits your collection needs. Once established, then work on following up. Your HOA may be able to collect with the policy and a period of amenesty.

Former HOA President
KerryL1
(California)

Posts:4381


11/15/2017 10:13 AM  
Melissa, Chris wrote: "I guess we need to speak with the lawyer and see what our best recourse is." So, as you can see s/he has no plans to go it alone. In addition, many HOAs, like ours, have a retainer agreement with our general counsel where unlimited phone calls are included in our annual fee of $500. He also has replied to simple emails at no charge. So, stop writing that all HOAs will be charged for every little thing the Board might ask of their HOA attorney. It's just not true.

Here are some things Chris' board or board's rep might want to ask their HOA attorney:

Maybe form an executive committee of Board members to tackle this task? It would include the Board treasurer, who sounds like they have too much on their plate.

Think about bringing a management company to work solely on this problem. It sounds like you don't have one now, right, Chris?

Many HOA bylaws permit the board of directors to appoint certain officers, who are non-directors, and even simply officers that they deem are needed. Could your Board appoint a couple of Owners to fill that role, supervised by your treasurer ? In other words, could these officers have access to the delinquency info; if so, under what conditions?

MelissaP1
(Alabama)

Posts:6788


11/15/2017 3:24 PM  
Not every HOA has an attorney on retainer. We did not. Don't recommend it unless your lawyer dependent. Yes, lawyers will charge you for expenses such as phone calls, emails, or other communications if that is how they do business. I can send a copy of our bill for such services. It's something you need to discuss with your attorney on how they charge.

My advice is before going to a lawyer, it's best to set up a collections plan. It's a waste of time/breath if you don't have a plan. Lawyers are just there to do what you tell them to do. Just ask them, they will tell you that. Hence why I don't hire one who gives me that response.

Former HOA President
JanetB2
(Colorado)

Posts:3642


11/15/2017 8:50 PM  
Posted By ChrisJ11 on 11/14/2017 9:11 PM
Thank you, everybody. Great info, but I guess we need to speak with the lawyer and see what our best recourse is. I just know that the current Treasurer, as well as past Treasurer's, have been lacking in their collection duties (if we have over $300K in late dues!). I appreciate the wise words...


Agree ... as the attorney can make sure your idea does not violate any of your State Laws with regard to debt collection. I agree with Sheila and Tim ... potentially this is information which is confidential and you need to be careful who has access.
DouglasK1
(Florida)

Posts:894


11/16/2017 8:25 AM  
Posted By MelissaP1 on 11/15/2017 3:24 PM
Not every HOA has an attorney on retainer. We did not.


Based on the totality of your postings, I wouldn't consider your HOA as the gold standard to which all others should aspire.
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