Assessments Collections - Pease help me understand what Bylaws mean

Started by TomP2 • 9 replies • 1780 views

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TomP2 (Arizona)
Posts: 28

Posted:

I am trying to figure out our Bylaws about the timeline for collection of delinquent assessment payments. Basically it boils down to two options for collections 1) Enforcement by Suit, and 2) Enforcement by Lien.

In the clause on Enforcement by Lien is this sentence:

"At any time within one hundred twenty (120) days after the occurrence of any default in the payment of any such assessment, the Association, or any authorized representative may, but shall not be required to, make a written demand for payment to the default Owner, on behalf of the Association".

I take it that this is guidance on when the Association can cause a formal Demand Letter to be sent to a delinquent owner. I can't figure out what "within one hundred twenty (120) days after the occurrence of" means. Does this mean the Association must wait until an assessment payment is 120 days delinquent before a demand letter can be sent, or, does it mean that the Association cannot send a demand letter after an assessment payment is 120 days late? Or does this mean something else entirely that makes beter sense than either or those?

In the clause on Enforcement by Suit there is no guidance on when the Board should start a suit for collection of delinquent assessments. It just says: "The Board may cause a suit at law to be commenced and maintained in the name of the Association against an Owner to enforce each such assessment obligation". Is there guidance in the Arizona Statutes on when a suit can be started?

Thanks for your thoughts!

RogerB (Colorado)
Posts: 5,067

Posted:

Tom, I suggest your HOA establish a collection policy if they don't already have one. I have enclosed an example. Someone else will probably respond to your question on Arizona statutes.

📎 Attachments (1):

📄181856386671.pdf(10 KB)

BarbaraP3 (Maryland)
Posts: 90

Posted:

Thanks, Roger. Boy, can I use this. My board/association has a collection policy but it is so loosey-goosey! This is clear cut and precise.
Again, a great big thanks from me.
Barb

TomP2 (Arizona)
Posts: 28

Posted:

Yes, thanks Roger. I am in fact attempting to draft up an Assessments Collection policy for our association. The rest of the Board finally agrees it's time to do it - it's been painful lately. I have read several policies that I located on the web for HOAs in Arizona. I have lots of ideas, just trying to understand our docs so I can get the timeline to match up to them. I appreciate your thoughts!

SusanW1 (Michigan)
Posts: 5,202

Posted:

payment is declared to be in default; HOA now must act within 120 days.

(Of course you will want to act within days of the default status, but this gives plenty of time for the HOA to get paperwork filed, etc.)

MaryA1 (Arizona)
Posts: 7,043

Posted:

Tom,

My interpretation of what you posted is that the assn cannot send a demand letter (the last step before a lien is filed) until the assessment is past due 120 days. Therefore if your assessments are billed monthly, due on the 1st and delinquent on the 15th, you cannot sent a demand letter until 120 days past the 15th. After the demand letter is sent and the member still takes no action to clear his account then the assn may file a lien.

AZ does not have an HOA statute which states when late notices and demand letters may be sent. But, 33-1807 (for planned communities) or 33-1256 (for condos) addresses foreclosures. A foreclosure cannot be entered into unless the owner is 1-year or $1,200 delinquent (whichever occurs first).

With regard to the requirements stated in your CCRs, I would suggest that the BOD consult with their attorney for a legal opinion. You may not need to wait 120 days to send a demand letter. The AZ statute imposes an automatic assessment lien ". . .from the time the assessment becomes due." This may mean that the assn may record a lien as early as 15 days delinquent. If that is the case then the requirements of your CCRs would be trumped by state law. What that would mean is that the assn's collection policy does not have to state that a demand letter will be sent when 120 days delinquent. My assn sends a demand letter when the account is 45 days delinquent. Then when it is 60 days delinquent the account may be turned over to our attorney for collection. The attorney's first action is to send another demand letter with 30 days to pay, then a lien may be filed.

TomP2 (Arizona)
Posts: 28

Posted:

"At any time within one hundred twenty (120) days after the occurrence of any default in the payment of any such assessment, the Association, or any authorized representative may, but shall not be required to, make a written demand for payment to the default Owner, on behalf of the Association".

I tend to think that what was intended is as Mary says. The Association must wait for 120 days after default to start the formal liening process by having a demand letter sent. But I also think that what is actually said is as Susan says. The Association cannot wait longer than 120 days to act. I guess we will have to get a legal opinion on it. We don't currently have a law firm on retainer for this stuff and I was hoping to be able to convince myself and the rest of the BOD that it made sense.

I have signed myself and the Treasurer up for the first 2 Collections seminars that start here in Tucson on 8/24. Not sure what to expect but maybe I can get a few specific questions answered about our Bylaws regarding assessments collections. Here's a link to the schedule from the Carpenter Hazlewood website:
http://www.carpenterhazlewood.com/assets/files/Fall_2010_Edu_Calendar_TUC.pdf
Maybe someone else has attended here or in Phoenix? If so was it helpful?

MaryA1 (Arizona)
Posts: 7,043

Posted:

Tom,

You may want to ask a rep from that law firm if they handle clients in Tucson. Otherwise they may be able to recommend an HOA attorney in Tucson. Sorry I am only familiar with HOA attorney's in the Phx area.

TomP2 (Arizona)
Posts: 28

Posted:

Their headquarters are in Phoenix. They have smaller offices in Tucson and Albuquerque. It appears to me that the 2 attorneys in their Tucson office are Realty/HOA focused while their Collections staff is in Phoenix. I was told that the seminars are done by an attorney out of the Phoenix office.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Tom,

I know Scott Carpenter and I would like to think you would get good advice from his firm. Ask your question at the seminar and see what kind of a response you get. Make certain to mention the AZ statute regarding the automatic assessment lien that is effective when the account is delinquent. I'm thinking that would override your CCR requirement of 120 days b/4 a demand letter can be sent.

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