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MarkC3
(Indiana)

Posts:43


04/17/2007 9:18 AM  
I am the president of our HOA and I am trying to clean up a mess left from previous boards. We have several residents that are late or very late on their dues. My goal is to get these paid what ever it takes. I have created a collection procedure to be followed by our Treasure. The procedure spells out how to contact the resident and when to send out late notices. I am looking for a sample letter to send to our offenders that I can use as a model. I have yet decided to either send a letter\invoice or and invoice with the letter (statement) embedded. Anyway, which ever way I choose I need a good start with a sample letter. Is there anyone that can assist?

Thanks.
RogerB
(Colorado)

Posts:4888


04/17/2007 9:51 AM  
Mark, HOAs we manage have established the following Rules and Regulations on Delinquent Assessments. These are provided to every owner. Then monthly Delinquency statements are mailed which include the amount due, due date, and information on what is the next step which will be taken if payment is not received.

Rules and Regulations on Delinquent Assessments

Assessments are delinquent when payment has not been received by the due date. A 10 day grace period is provided for receipt of payment after which the property is assessed a late charge of $10.00 per month.

Assessments may include, but are not limited to, the annual (regular) assessment, special assessments, late charges, interest, fees, fines, attorney fees, collection costs and court costs. All costs related to a delinquent account shall be assessed to the property and paid by the owner. The Declaration (Covenants) establishes that an assessment is a continuing lien upon the property and a personal obligation of the owner.

The annual assessment is determined by the Board of Directors as part of the annual budget. The annual budget is ratified, or vetoed, by homeowners at the annual meeting. If the members veto the budget, then the prior budget, including the annual assessment, remains in effect until a new budget is approved. The annual assessment may be paid on a quarterly basis with payments due on the first day of each quarter beginning January 1st, April 1st, July 1st, and October 1st. Assessment payments shall be applied to the oldest assessment first and progress toward the most recent assessment.

Statements may be provided by mail, e-mail, or coupons as a reminder to homeowners of the amount and due date of a quarterly assessment. Nevertheless, it is the responsibility of the homeowner to remember to pay by the due date even if a statement is not received. An owner may request consideration by the Board of Directors to defer payment due to extenuating circumstances.

An account delinquent over 10 days will be charged $10.00 each month it maintains a balance over $10.00. If a check is returned the account becomes delinquent plus there is a charge of $35.00 for the returned check.

An account delinquent over 70 days shall be provided a warning that a lien will be recorded on the property if payment is not received within 30 days.

An account delinquent over 100 days will have a lien filed with the Douglas County Clerk. The lien amount will include a filing charge of $100.

An account delinquent over 130 days shall be provided a warning that the account will be referred to an attorney for collection if not paid within 30 days.

The Association shall make a good faith effort to resolve disputes first with the Owner. If resolution is not reached the Association stands ready to go to binding Arbitration under the Uniform Arbitration Act. The parties are herein forewarned that if court proceedings are necessary to resolve a dispute, the court shall award to the prevailing party reasonable collection costs, attorney fees, and other costs.
JM2
(Oregon)

Posts:439


04/17/2007 10:34 AM  
Hi Mark:

If your HOA has a law firm that handles your collections, it would be wise to have them help you draft the letter. It needs to be specific to your documents, state law, and the federal statutes on fair debt collection. Also, have them draw up a resolution for the Board to pass (if you don't have one already) and then make sure that a copy is mailed to each owner in your HOA.

Once you have all that in place, it's simply a matter of following the procedure for each delinquent account. However, if you have a newsletter, you might want to advise people that the Board is getting all of this in place, and will be actively pursuing people who are delinquent in their payments.

You might want to include a provision regarding the opportunity for delinquent owners to set up payment plans. Your lawyer can assist you in the resolution as well as the collections process. One thing to make sure that you do, is once an account is sent to collections, that owner deals with your collection agent only regarding how much is owed, until they are up to date. They can talk about any other subject, other than what's owed; always refer them to the collection agent for that info.

J. Patrick Moore, CMCA
AnneR1
(California)

Posts:1


04/17/2007 10:42 AM  



Re: Delinquency Notice

Dear Owner:

Our records indicate that your association assessments are past due for your property located in "name the HOA". We have enclosed a "statement or ledger" showing the status of your account and ask that you pay the total amount due, upon receipt of this notice.

Please make your payment payable to: "list HOA and address"

If you feel that this is being sent to you in error, have recently sent your payment or wish to discuss your concerns with the Board of Directors, please let us know by responding in writing to the address listed above.

If we do not hear from you or payment is not received in full within "list the number of days" from the date of this letter, we will proceed with the Association's delinquency policy and turn this account over to the Association's attorney. A lien will be filed on your property and you will be assessed addtional legal fees and costs, including the cost to send this certified letter.
DwightT
(Idaho)

Posts:664


04/17/2007 11:58 AM  
Posted By RogerB on 04/17/2007 9:51 AM
Mark, HOAs we manage have established the following Rules and Regulations on Delinquent Assessments. These are provided to every owner. Then monthly Delinquency statements are mailed which include the amount due, due date, and information on what is the next step which will be taken if payment is not received.




Roger -

Thank you for posting that. We are trying to come up with a set of "Rules and Regulations" for our HOA and have been having some trouble in coming up with how they should be structured. Your example will go a long way in helping us decide what an R&R should look like.

By any chance do you have any that do not include any direct financial penalties? If so, could I ask you to share one of those as well?

Thanks
RogerB
(Colorado)

Posts:4888


04/17/2007 12:11 PM  
Posted By DwightT on 04/17/2007 11:58 AM
By any chance do you have any that do not include any direct financial penalties? If so, could I ask you to share one of those as well? Thanks



No. And I would never suggest not having financial penalties because there would be no incentive to pay.
DwightT
(Idaho)

Posts:664


04/17/2007 1:36 PM  
Posted By RogerB on 04/17/2007 12:11 PM

No. And I would never suggest not having financial penalties because there would be no incentive to pay.




Well, I don't disagree with that, but except for late fees on annual dues payments our CC&Rs don't have any provisions for fining for violations. The CC&Rs do state that we can take away their voting privileges and their access to common areas (such as the pool), and we can take them to court (and then assess them for legal costs) to force compliance, but it doesn't say anything about the Board having the authority to assess general fines. That's why I was looking for an example of an R&R without financial penalties.
BradD2
(Florida)

Posts:418


04/17/2007 6:21 PM  
Have you checked your by-laws and articles of incorporation? I would read through everything if I was you and look for something that may not specifically establish a late fee and grace period but rather gives the board the ability to add fees or something.

If not I would suggest you look at amending your documents to do that. Talk to those who do pay and suggest that you trying to make it difficult for those who don't. Those who do pay don't want to have to pay even more to cover the deadbeats.
RogerB
(Colorado)

Posts:4888


04/17/2007 8:38 PM  
Dwight, a late fee is a financial penalty. And what do you do when there is a violation of restrictions which is not corrected? It is rediculus, in my opinion, to take every violation to court. Also, doesn't your Declaration allow for establishment of Rules and Regulations. If you are really correct that your "CC&Rs do not have any provisions for fining for violations" I think they need to be amended.
DwightT
(Idaho)

Posts:664


04/18/2007 6:16 AM  
Brad & Roger - Thanks. I agree that our CC&Rs should be amended. However, I doubt if that will happen to add fines. This is Idaho where most people would rather put more restrictions on the HOA, not give them more power. :-) I also agree that it would be ridiculous to take somebody to court for something like leaving their trash can out. Luckily we haven't had to go that far yet for something so trivial (although we have one now who I'm afraid is trying to test the limits).

However, in perusing the CC&Rs for the umpteenth time, I noticed this clause under 'Association Duties':

(f) Enforcement of Restrictions and Rules. Perform such other acts whether or not expressly authorized by this Declaration, as may be reasonably advisable or necessary to enforce any of the provisions of the Declaration, or of the Articles or Bylaws, including without limitations, the recordation of any claim of lien with the Ada County Recorder, as more fully provided herein.

While the CC&Rs don't explicitly give us the ability to fine, they don't deny it either, and the "Perform such other acts" may be generic enough to imply that we can impose a fine. I think we may be exploring this a little more at the Board meeting tomorrow night.

Thanks again.
BradD2
(Florida)

Posts:418


04/18/2007 6:58 AM  
Dwight, can you collect on costs encurred by the association in collecting of the dues or legal fees? If so then the threat of additional expenses by adding legal fees might also be enough for some to pay up.
MarkC3
(Indiana)

Posts:43


04/18/2007 7:19 AM  
Great advice (as always), thanks.

And AnneR1, thanks for the sample letter. Great help.


DwightT
(Idaho)

Posts:664


04/18/2007 7:35 AM  
Yes we can, and that "threat" has been effective in a couple of instances in the past. But it sure doesn't make people feel warm and fuzzy about the HOA when the Board has to use threats.

My thinking is that with fines the Board retains a little more control over the process. If the matter goes to an attorney, then we have to try to recover those costs from the homeowner. Ultimately the goal is to ensure compliance with the CC&Rs, not to punish a homeowner. A fine can still be waived by the Board if we decide that the situation justifies it. I'm not saying that we would ever waive a fine, but it would be nice to have that option.

Hopefully if we can come up with a reasonable set of Rules and Regulations that defines the infraction and lays out the consequences (whether it's an HOA fine or an attorney fee) and the process that will be followed, then we can avoid as many of these situations as possible.
BradD2
(Florida)

Posts:418


04/18/2007 7:40 AM  
Dwight if you have to you can begin collecting for the cost of mailing the late notice. Consider this:

10 minutes at $45 an hour: $7.50
Copy Costs: $0.25
Envelope: $0.05
Certified Mail Costs: $4.50

at the very least you could recover the $12.30 listed above as your "late fee".
LindaC3


Posts:0


04/18/2007 7:50 AM  
I noticed that you mentioned Federal Statutes on Fair Debt Collection......... In your opinion do these Statutes apply to an HOA as a Not for Profit Corporation?? LindaC
JM2
(Oregon)

Posts:439


04/18/2007 8:51 AM  
Hi Dwight:

Look under "assessments," sometimes the power to fine is hidden in assessment language.

J. Patrick Moore, CMCA
JM2
(Oregon)

Posts:439


04/18/2007 8:52 AM  
Hi Linda:

Yes, the Federal statutes on Fair Debt collection do apply to HOA's as non-profit corporations.

J. Patrick Moore, CMCA
LindaC3


Posts:0


04/18/2007 9:15 AM  
So in your opinion is it unlawful for an HOA to publish a list of those persons who are late in paying their assessments in the HOA newsletter ??? LindaC
BradD2
(Florida)

Posts:418


04/18/2007 9:41 AM  
Yes, Linda. That would fall under notifying a third party of a debt.

I have asked about notifying the mortgage company if someone may have a lien applied and decided against it when I came across that particular restriction. There are have been several links to the Fair Debt Collection Act on the web. It is a federal act so the State doesn't matter.
BradD2
(Florida)

Posts:418


04/18/2007 9:47 AM  
The act is at http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm

Section 805(b) says:
(b) COMMUNICATION WITH THIRD PARTIES. Except as provided in section 804, without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy, a debt collector may not communicate, in connection with the collection of any debt, with any person other than a consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.

That means that the homeowner must authorize their name to be published as part of being late; I doubt that happens much.

Section 813 says:
(a) Except as otherwise provided by this section, any debt collector who fails to comply with any provision of this title with respect to any person is liable to such person in an amount equal to the sum of --

(1) any actual damage sustained by such person as a result of such failure;

(2) (A) in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $1,000; or

(B) in the case of a class action, (i) such amount for each named plaintiff as could be recovered under subparagraph (A), and (ii) such amount as the court may allow for all other class members, without regard to a minimum individual recovery, not to exceed the lesser of $500,000 or 1 per centum of the net worth of the debt collector; and

(3) in the case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attorney's fee as determined by the court. On a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney's fees reasonable in relation to the work expended and costs.

(b) In determining the amount of liability in any action under subsection (a), the court shall consider, among other relevant factors --

(1) in any individual action under subsection (a)(2)(A), the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional; or

(2) in any class action under subsection (a)(2)(B), the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, the resources of the debt collector, the number of persons adversely affected, and the extent to which the debt collector's noncompliance was intentional.

(c) A debt collector may not be held liable in any action brought under this title if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.

(d) An action to enforce any liability created by this title may be brought in any appropriate United States district court without regard to the amount in controversy, or in any other court of competent jurisdiction, within one year from the date on which the violation occurs.

(e) No provision of this section imposing any liability shall apply to any act done or omitted in good faith in conformity with any advisory opinion of the Commission, notwithstanding that after such act or omission has occurred, such opinion is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.


That means the person can sue the HOA for posting the name if they wish.

Be aware that one state Supreme Court ruled that meeting minutes could identify a homeowner, if those meeting minutes were not made public. They are association records and so any member could see those records. If you were to post the meeting minutes and they contained talk about specific deliquent accounts then it must be posted in a members only area. Otherwise you are not complying with the above.
LindaC3


Posts:0


04/18/2007 9:47 AM  
BradD2....So in essence if we ( meaning members) have notified or informed our BOD in an open meeting that they are in violation of the Federal Fair Credit Reporting Act by publishing the names of Members and the amount owed and they continue to do so- they are in fact violating the law ??? Just want to be extra clear on that so I can for the FINAL time send them info to advise them that it would be in their best interest to cease from continuing this practice...LindaC
RogerB
(Colorado)

Posts:4888


04/18/2007 10:07 AM  
Linda, I would put it in writting and give them a website address so they can check it out. The practice of publicly releasing names of delinquent owners does nothing to achieve the objective; it only leads to animosity and divisiveness.
BradD2
(Florida)

Posts:418


04/18/2007 10:26 AM  
That is correct Linda. There is no excuse listed in that act for "we just didn't know any better". The mistake excuse is valid only if there are clear policies in place to prevent it from happening.

It seems they need someone to show them what happens if they continue to do it. I would be tempted to miss my dues for a month so that I could take legal action against them. Of course once it is learned that one person has gotten $500 or so per time then everyone will and pretty soon the HOA will be broke.
LindaC3


Posts:0


04/18/2007 10:37 AM  
Strange you would say that.........That has just happened here today.. We had a Member who has told them numerous times that this practice is against the law and he was laughed at by the BOD at the meeting..He just not less than 30 minutes ago filed a complaint here in Florida against the BOD...Now let's see if that gets their attention....They have also revoked his rights here for being 60 days late EVEN though we do not have a written policy for 30-60 days only for 90 days and that is in our Deed Restrictions about loss of rights and placing a lien on the property........Of course we are being chastized by fellow Members here because we are as some of them say....running our finger nails against a chalkboard and pitting them against us.... LOL.......Most folks here are under the distinct IMPRESSION that because the BOD says it ===IT MUST BE TRUE....So now I am on the poopy list and my Appeal Commitee position has been taken away from me because I sided with this Member....LOL LOL............LindaC

BradD2
(Florida)

Posts:418


04/18/2007 11:07 AM  
If you look through the link it tells you where you can file complaints about creditors ignoring the act. As I read the act you can get up to 1,000 per incident and if your D&O insurance is like ours it is not covered. There is an exception about the distribution of information and holds the HOA 100% accountable.
LindaC3


Posts:0


04/24/2007 8:45 AM  
Follow up question...Because a few Members here questioned the posting of persons names thet are late on paying of dues it has been brought to our attention that at the next BOD meeting they are going to try and pass a new rule that will be in total conflict of the CC&R's that will require persons whom they deem to be habitual late payers..their rights to use common area will be suspended for an additional 90 days....Even if they pay every month on time becuase they were late say 2 months in a row they are going to suspend your rights for 90 days..........Our CC&R"s state that no suspension of common area usage may occur UNTIL a notice of lien had been placed against the property for being in excess of 90 days late.... Is this rule in conflict of the CC&R's and thus not applicable....thoughts and comments appreciated....THANKS BUNCHES LindaC
RogerB
(Colorado)

Posts:4888


04/24/2007 9:15 AM  
Linda, the Board should not pass rules which conflict with the CC&Rs. If they do the rule as stated it is in conflict and is not valid. Perhaps your Board members need to log into this website and get some education ;)
LindaC3


Posts:0


04/24/2007 9:30 AM  
RogerB--- I have to thank you for the best giggle of the month............Our BOD Members walk on water or so they think.. It is becoming a slow process just informing neighbors here of some of the INVALID things that the BOD is doing... HOA Talk is my secret and the less they know about what I am up to the better.... With a few of us informing our neighbors of Florida State Statutes in the past few months to date -- TWO members have filed a petition for mediation againt the BOD..... One has been granted by DPBR and the other one was just mailed yesterday...Our BOD does not want input from any of us here if it goes against what they believe to be true... Only ONE Bod Member who is an Attorney is starting to listen to us.... We have 4 attorneys as BOD Members and we find it interesting how ignorant of the law they are.....But with due diligence of a few of us who really care about what happens here we do see light at the end of tunnel..Rome wasn;t built in a day and neither was our HOA...... Once again thanks for the giggle...LindaC
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