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MikeC6
(Illinois)

Posts:30

03/15/2010 12:32 PM
We have a community of 79 single family homes in Illinois where we are just responsible for the common areas (2 ponds and a wetland area). We recently had a lawsuit with a homeowner and an above ground pool where the judge sided with the homeowner. There are 20 homes now not paying their 2010 dues and they are 45 days past due. We have sent 3 letters. We can take them to collections, but that does nothing but cost us money and we can put it on their account, but they really do not have to pay until they move. What can be done to make them pay? Is putting the names of these 20 homes out to the rest a good idea just to inform them?

MaryA1

Posts:0

03/15/2010 1:25 PM
Mike, Do your docs allow the BOD to fine for nonpayment of assessments? If so, then that is the next step to take, followed by a demand letter then placing a fine. The last resort is to foreclose. In AZ before a fine can be assessed the member must be given the opportunity to appeal to the BOD. Twenty homes delinquent out of 79 is a very high %. If the BOD cannot get these members to pay your budget is going to suffer. The end result will be an increase in assessments which amounts to the remaining members having to pay for those who won't. Our attorney does a credit report on all the delinquencies so we can readily see what the member's financial position is. If we see a member who is up-to-date on his mortgage and credit cards then we have no qualms about going after him. On the other hand, if the member is behind in all other debts then we have a good indication that we won't have much luck collecting from him. With the number of delinquencies you have, the BOD may want to get an attorney involved to at least do a credit report and send demand letters.

RobertR1
(South Carolina)

Posts:5164

03/15/2010 11:13 PM
Mike, Mary is probably pointing you in the right direction, she usually does. I would made an observation that your Board should clearly understand what your documents dictate, and if you have no collection policies in place you add them to your documents. It might be a good idea to look at some other associations documents in the area and see how they do it. The fact that you have such a large % of owners not paying would indicate that it is the Boards responsibility to figure out why this is. Mary tells you what her association does, think about something like that. It could be that your BOD is not considered strong enough or wise enough to make the collections. It could be that one owner elected not to pay and the others are copy cats. The cause should be determined. It would also demand consideration that your Board hold a town-hall type meeting to explain what is going on, why you know this, what the Board HAS to do by mandate of the documents, how you intend to do it and when you expect to start...............and do it. No one wants to run their neighbor into debtors prison, make that clear, and you would be well served to explain the Board is always available to discuss specific circumstances, however, the BOARD MUST make efforts to collect these fees and inform the owners in writing and at the meeting the procedures. Notice this meeting properly as required by your documents, run and control the decorum and know what you are talking about and select the member to be spokesman that can do the best job, with the total support of the Board. Sounds like if you all don't do something to take charge, your problem is going to get worse and when the economic situations improves people are not going to stand up and just had you the cash. Keep in mind you still have a number of folks paying their fees, try hard to get them to attend the meeting, they will carry the voice of the Board back to their neighbors. Don't publish any lists of delinquents until the information is publish in the court records and even then seriously consider just not making this public information..........not worth it.

DeeS1
(Michigan)

Posts:223

03/16/2010 5:23 AM
Our management company says they are experiencing roughly 25-30% delinquency rates this year (I'm in Michigan), so it sounds like you might not be too much higher than our area. Our delinquent account homeowners are kept confidential. You could, however, publish the delinquency rate (percentage) for the community ... we do this in our newsletter. We have had very good success with following a pretty consistent collections policy as Robert suggests. The homeowners all know when fines will be accessed and that we will actually move forward towards foreclosure if necessary (we have never moved that far, though, not do we want to). Historically, all but one of our accounts have paid when they get the "intent to record a lien" letter from the attorney or the actual lien notice. I think most homeowners really don't understand a lien and want to avoid it. It also shows that your are serious about collections and expect them to pay. The board has a responsibility to collect from these homeowners as it can. It is unfair to burden the paying neighbors with either higher dues or reduced services. If you don't have one already, the board should come to resolution on a collection policy. You may want to publish this for the community. FYI -- we are always willing to work with homeowner if they contact us to make arrangements. At one point, we wanted to reach out to some delinquent homeowners to see if they wanted to make payment arrangements, however, our attorney advised us against this because we then act in the capacity as a "dept collector" and there is a lot of legislation restricting what can be done and said in this capacity.So, be careful here.

RobertR1
(South Carolina)

Posts:5164

03/16/2010 5:48 AM
Dee, Excellent post, well said. Not just because I agree with it, but no matter what your methods of doing this collecting; it is a mandate of the Boards, and at some point you have to consider all the things that Dee posted. A personal peeve and I'll probably catch hell for saying it, but anymore, just about anything I hear from anyone that handles real estate say, I consider the source seriously. We all form opinions at times on experiences and some of the tactics I saw mortgagors and real estate companies demonstrate during the boom real estate years were questionable to say the least. When I buy a car I don't buy it because of what the salesperson says. So the remarks Dee got from her Management Co may be self serving to some degree.......I say "may". 25 to 30 % seems high for a national average and I expect this figure would reflect the unemployment figure so it is possible in some selected areas

DeeS1
(Michigan)

Posts:223

03/16/2010 6:19 AM
You are correct, Roger. Michigan has been exceptionally hard-hit with foreclosure and unemployement, which is why I noted location. Our community is only at 11%, which is why the subject came up with the MC. I did speak personally with three other HOA's members (not represented by our MC) and their numbers are in the range the MC quoted too. Locally, most communities immediately surrounding us have their assessment due Jan 1, so 45 days into collections really isn't that far. Our policy doesn't get turned over to the lawyers until 60 days, then the lawyer gives them 30 days before filing a lien. A high percentage pay up when the get the first note from the lawyer. Mike: You might be surprised how many pay up simply just by using a collection policy.

JodyC
(California)

Posts:3

03/17/2010 3:07 PM
Hi Mike, You want to cover your association and place liens on the properties that are delinquent. Check with your property manager to see what the amount is to legal lien a unit in your state. In California it is $1800. If you have common areas other than those mentioned you will want to restrict those delinquent owners from using them. Check with your CC&R's and see if that is allowed. Common area usually include, pools,gyms,tennis courts,valet aprking and guest parking. Once the lien is placed you will want to see what you foreclosure options are. It is better to have a paying owner in that unit than a non-paying owner. If the owner has the monies to pay more often than not you will see the check soon after the notice to foreclose is filed. Good luck.

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