Back Dues and Foreclosures. Our HOA didn't act quick enough!

Started by NicoleO4 • 20 replies • 1413 views

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NicoleO4 (California)
Posts: 160

Posted:

We had a homeowner who unfortunately was diagnosed with a progressive neurological illness. It forced him onto disability, and in the end the poor man lost his home due to mortgage issues. He was behind about $3000 in back dues.

His home was in foreclosure, on the market and we all knew it. Our atty handles all of these issues and has a 90% payback of dues when these homes are actually sold.. pay back from the bank upon being sold.

HOWEVER... something didn't go right and we had our forclosed home sell without having the "right paper work done" in an expediant manner.

Our lawyer is asking us to consider taking legal action on this man who has NO income except his SSI now. How pathetic of a situation we are in.

I myself feel sick over this one.

GeraldT4
Posts: 1,022

Posted:

NicoleO4 - Pose the details and the question to the membership for their decision. Perhaps each can see the reason behind this very special circumstance to let the poor man rest in peace.

NicoleO4 (California)
Posts: 160

Posted:

I personally do not think I can vote on this one. Knowing his condition.... knowing it's going to take any income he has coming to him..... I think my vote will be a abstain.. or a no. I can't vote with that on my conscience!

GeraldT4
Posts: 1,022

Posted:

NicoleO4 - A vote of "no" to seek 90% of $3,000 is not an obligation to never seek the same from someone else. You have an unusual circumstance where one of your members has become so ill as to loose their home and faculties. To me, it is a no brainer to vote no. Kindness is half of life (Wickipedia)

KirkW1 (Texas)
Posts: 1,665

Posted:

I agree that a decision to write off one debt doesn't make you obligated to write off any future debt. I would also point out that even with the right paperwork in place you would not have been guaranteed the money. Your attorney may have a 90% rate, but he does lose 10% and this may have fallen into the same.

I am sure you could get a judgment. But to collect could be another matter. Consider that he probably doesn't have much in assets. They were probably exhausted before he lost the house. So going after him now could well be throwing more money into a hole.

If your attorney is all fired up on his horse, then he/she should pony up the money. It was the attorney who made the error. So in my opinion he/she is just as responsible now. But stuff happens and we move on.

SusanW1 (Michigan)
Posts: 5,202

Posted:

You said: HOWEVER... something didn't go right and we had our forclosed home sell without having the "right paper work done" in an expediant manner.

Who is the "we" - the Board or the lawyer?

Seems like whomever dropped the ball is responsible for this. If it's the lawyer, make sure he pays. If it's the Board, then make sure it does not happen again.

What "right paperwork" was not done? And wy not?

MaryA1 (Arizona)
Posts: 7,043

Posted:

Nicole,

I agree with Susan. Find out who was at fault, if it was the attorney then he should be liable. Perhaps that's why he is suggesting going after this poor guy. No way could I, in good conscience, seek restitution from anyone in the position this man is in. I don't believe a vote of the membership is needed either. The board has the authority to make this decision. And, as others have stated, if this debt is released it has no reflection on future debts that may occur. There are certain situations when you have to look at the individual case when making your ruling, and this is, IMO, definitely one of those times.

SusanW1 (Michigan)
Posts: 5,202

Posted:

I don't believe that you can get a judgment like this from a person on SSID anyway.

RogerB (Colorado)
Posts: 5,067

Posted:

Nicole, does your HOA have a collection policy? It seems to me that your Board screwed up by letting a homeowner get $3000 behind. If your HOA had a collection policy in place then it was either bad or your Managing Agent or Attorney, whomever was responsible for collections, did a very poor job. Don't know what issues your Board allows the attorney to perform for them but on the surface they, the attorney and perhaps the Board, appear to be incompetent. I would not take the lawyers advise on taking legal action; rather I would vote to write it off as bad debt.

NicoleO4 (California)
Posts: 160

Posted:

Yes we have a collection policy. Our ATTY handles it. According to the email we got from him..."paperwork was not filed in time, or we didn't act fast enough". I will ask to elaborate on this. As I do not plan on pursuing money from somone ons SSDI it is just sickening.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Save that email!! Sounds like the attorney screwed up!

Motion at the next meeting for a full investigation of the attorney's actions BY AN INDEPENDANT SOURCE (by another attorney)

It will be worth your money, even if you break even.

GlenL (Ohio)
Posts: 5,491

Posted:

While I would not pursue this because the error that caused this was evidently on your side; keep in mind that the BOD has a fiduciary duty to its members to collect all monies owed. Non-Profit does not mean charitable. Where do you draw the line, how much of a sob story do you need to get out of paying your debts?

And yes we have been through a similar situation; an owner approached the BOD because she had cancer and could no longer afford to pay her assessments. She stated that she was attempting to sell her unit and would pay as soon as it was sold. We waived the late fees but we did lien her unit to insure that the Association would receive the monies owed when it did sell.

Studies show that 5 out of 4 people have problems with fractions

MaryA1 (Arizona)
Posts: 7,043

Posted:

Quote:

Posted By GlenL on 08/23/2008 9:26 AM
While I would not pursue this because the error that caused this was evidently on your side; keep in mind that the BOD has a fiduciary duty to its members to collect all monies owed. Non-Profit does not mean charitable. Where do you draw the line, how much of a sob story do you need to get out of paying your debts?

And yes we have been through a similar situation; an owner approached the BOD because she had cancer and could no longer afford to pay her assessments. She stated that she was attempting to sell her unit and would pay as soon as it was sold. We waived the late fees but we did lien her unit to insure that the Association would receive the monies owed when it did sell.

Glen,

I really think this is alot more than just falling prey to a sob story. THis individual has already lost his home to the bank. The HOA erred in their attempt to collect. But, I do understand what you are saying. The BOD's first duty is to the assn. but that doesn't mean they cannot show some compassion and understanding in carrying out their duty.

KirkW1 (Texas)
Posts: 1,665

Posted:

I think there is something else that needs to be seriously considered here.

Suppose you do in fact get a judgment for the $3000. What then? I would bet you now have a worthless piece of paper. The guy already has his credit ruined. His money is going to basic needs and medical expenses. An attempt to garnish his wages is not going anyplace since the federal government is soon going to pay Medicaid. What assets are you going to attach? He no longer has a house and has probably gone through any savings.

I suppose you might be able to raid his checking account just after his next check comes in. But you should be ready to make national news when you do so. And will your neighbors think it is worth it??

This isn't about charity at this point. The reality is that you have lost the money. Your attorney won't collect it even if he was authorized to file suit. And by the way, is the attorney conveniently going to charge for his services while doing so?

NicoleO4 (California)
Posts: 160

Posted:

Please keep in mind, me the original poster does not support garnishment of this mans SSDI. I think it should just be a write off and and investigated as what went wrong before the sale of this house.

NicoleO4 (California)
Posts: 160

Posted:

NicoleO4 (California)
Posts: 160

Posted:

MaryA1 (Arizona)
Posts: 7,043

Posted:

Definitely investigate what went wrong to ensure it doesn't happen again! If the attorney erred; find a new one.

KirkW1 (Texas)
Posts: 1,665

Posted:

Quote:

Definitely investigate what went wrong to ensure it doesn't happen again! If the attorney erred; find a new one.

Well, if he admits he made the error and takes the responsibility then he should be kept. But if his answer is to attempt to garnish wages then you should consider the moral consequences of keeping him around.

MicheleD (Kentucky)
Posts: 4,491

Posted:

Quote:

Posted By KirkW1 on 08/23/2008 7:47 PM
I think there is something else that needs to be seriously considered here.

Suppose you do in fact get a judgment for the $3000. What then? I would bet you now have a worthless piece of paper. The guy already has his credit ruined. His money is going to basic needs and medical expenses. An attempt to garnish his wages is not going anyplace since the federal government is soon going to pay Medicaid. What assets are you going to attach? He no longer has a house and has probably gone through any savings.

I suppose you might be able to raid his checking account just after his next check comes in. But you should be ready to make national news when you do so. And will your neighbors think it is worth it??

This isn't about charity at this point. The reality is that you have lost the money. Your attorney won't collect it even if he was authorized to file suit. And by the way, is the attorney conveniently going to charge for his services while doing so?

Interesting comments our attorney made in a similar situation.

He recommended obtaining the judgment. Just because we have a judgment, he argued, does not mean we HAVE to try to collect on it. But, since the house is going into foreclosure, you never know.

The homeowner could come into some money somewhere along the lines, dig herself out of her hole, and get the house back out of foreclosure.

IF that happens, then we can move to collect.

The homeowner in question was diagnosed with M.S. last year. As it turns out, before we had to make the decision, her son paid the dues up-to-date, so the issue somewhat went away.

JackG2 (Virginia)
Posts: 10

Posted:

The Lawyer may have meant the HOA didn't act quickly enough from the time the collection was turned over to his office, where a dunning notice was sent to the homeowner, and a usual 30 day grace period is given to hear from the homeowner before further collection action; usually a lien.

It's possible that a title search wasn't competed after the collection went to the Attorney, and in that time frame the house may have gone into foreclosure. At that time, usually, any past due amount is lost.

The thing I can't understand is how could the homeowner be allowed to run a past due balance of $3,000? If the board allowed the homeowner to go into such arrears, the board wasn't doing it's fiduciary duty and could be responsible. There should be some kind of Collection procedure in place for your HOA, and in most cases the board cannot make an arbitrary judgement of forgiving a past due amount. This decision needs to be made a majority of the association members.

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