Assesments to Small Claims?

Well, you have to do something to collect delinquent dues - if a kinder approach gets the job done, that's great, but ultimately, it's about the Association protecting its interests - you do that by filing a lien against the property for the unpaid amount, getting a judgement in small claims court or foreclosing on the property.

If residents know it'll cost another $1300 in court costs and attorneys fees in addition to paying the delinquent amounts, that should be an incentive for them not to get behind in the first place. These days everyone's budget is being challenged, but it's a homeowner's responsibility to go to the association and let them know what's going on to negotiate a payment plan. It's better to keep some money coming in than nothing at all.

Our association begins with letters and payment plans, but when those don't work (or the homeowner ignores the letters or doesn't stick to the payment plan), we go to small claims court or liens. It depends on how much money is owed and given limited funds (because of legal fees incurred in chasing other delinquent homeowners), we're reviewing all accounts carefully to see which approach will best protect the Association's interests.

In Indiana our covenants make unpaid assessments both a claim against the owner as well as against the property.

"Any assessments authorized herein, together with interest, costs and reasonable attorneys' fees, shall be a continuing lien from the first day of January (for annual assessments) and from the date the first installment is payable (for special assessments) against the Lots assessed. Each assessment, together with interest, costs and reasonable attorneys' fees, shall also be the personal obligation of the person who was the Owner of such Lot on the date said assessment became due and payable."

But keep in mind that even if a judgment is entered in small claims court, it may take quite a bit to get it collected. The judgment only validates the claim. And if the person in default lives in another state, it may not be feasible to collect on a small claims judgment.

We budget annually an allowance for "bad accounts." It is just part of doing business.

I would write a letter before things go to the attorney stating that you do not like this option. And I would spell out that costs will increase dramatically. Then request that they contact the representative to work out a payment plan. If they do not respond, then go ahead and send it to the attorney.

All too often (in my opinion), owners are not told they can setup a payment plan. Some associations won't allow that unless you are at legal. I don't understand this since in the end a plan is in place. Punishing a person for not having the money doesn't sit right with me. Yet, you have to collect the money all the same.