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LindaG7
(Florida)
Posts:1
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| 07/28/2008 7:15 AM |
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I was wondering if a Florida HOA can file in small claims court against residents that have not paid their assessment. Our management company states that all Florida HOA have to have all legal issues handled by the association attorney. Our CPA recommended small claims as an approach and stated his other clients found that it has worked.
My reason for asking is because assessment collections via the association attorney end up costing the residents about $1,300.00 in addition to their annual assessment and that is only to the point of filing a lien on the property.
Our Board has two different points of view when it comes to collection of outstanding assessments:
1. Standard collection via our HOA attorney, which is costly to a resident already in the rears. But does safeguard against possible errors in the process.
2. More gentle approach; extra letters to residents with outstanding accounts, options of payment plans, phone calls, visits to homes. Yes a more compassionate approach, but riddled with possible errors and selective enforcement.
Could small’s claims be a happy medium?
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SheliaH
(Indiana)
Posts:92
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| 07/28/2008 7:26 AM |
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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. |
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MicheleD
(Kentucky)
Posts:1866
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| 07/28/2008 7:30 AM |
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I don't know about Florida, so I can't offer anything constructive there.
However, at least here in Kentucky, the options are not that limited.
It's not either lien OR small claims, it's both.
We can file a lien if payment is not made AND we can go to small claims even after we file a lien.
A judgment in small claims will allow us to begin such actions as garnishment of wages, etc.
The lien is against the property. A small claims judgment is against the person.
Once we receive all payments in full through the small claims process, we can then release the lien. The lien remains, though, until the judgment is satisfied to protect us in case the homeowner decides to sell and/or refinance.
The judgment protects us if the homeowner goes into foreclosure and the lien is automatically distinguished. Granted the judgment might be harder to collect on if the homeowner forecloses, due to being in financial straights, but he will at some point be back on his feet. There's no expiration date for a small claims judgment, so case we dust off the small claims judgment and garnish wages, etc.
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GeorgerwilliamsW
(Indiana)
Posts:768
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| 07/28/2008 7:48 AM |
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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. |
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GlenL
(Ohio)
Posts:1466
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| 07/28/2008 2:48 PM |
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| Linda before you file in SC call and ask if a corporation can file without an attorney. Now the person cannot give legal advice but they should be able to tell you about procedures. We filed in SC to recover damages for a vandalized clubhouse only to find out that we still had to hire an attorney to represent the corporation (HOA) even though I brought the suit as an officer of the corporation. |
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KirkW1
(Texas)
Posts:1190
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| 07/29/2008 11:26 PM |
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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. |
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