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Subject: Chronic Hoa Dues Delinquency
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EpE
(Washington)

Posts:4


05/19/2021 4:35 PM  
We have a condo owner that remains chronically delinquent. After several month (9-12) and just before the HOA foreclosure legal process has run its course, the condo owner pays off the accumulated debts and begins the delinquency process again. This has caused the monthly HOA assessment to have grown over the years for all the other *on-time paying* condo owners to make-up the difference in the operating budget for our small (less than 20 unit) condo ASSOCIATION. The damage is done by the time the delinquent condo owner pays the fees and dues, legal fees, etc., that have accumulated over several months.

Our chronically delinquent condo owner, has already begun the process for this year, having a COVID collections moritorium
headstart behind him/her. Our board hopes to remedy this by assessing an extra penalty or fee for chronic delinquency. Our attorney has asked our board to provide some semblance of language for such a legal document to be constructed and for legality review.

My question: is there any language out there for a legal document for special penalties, fees, or assessments for a condo owner(s) that are chronically abusing HOA fee delinquency?
SheliaH
(Indiana)

Posts:4290


05/19/2021 5:22 PM  
Your attorney has a good idea, but why is he or she asking YOU this question? Legal research is what he/she is hired to do (although paralegals do the donkey work most of the time). I would think your documents have some language about homeowners being responsible for paying assessments and if they don't, the association may take appropriate steps to collect the debt - and the homeowner would be liable for all collection costs and attorneys fees, in addition to the late payments, late charges, returned check charges, etc.

It may be your attorney wants you to establish some sort of collection policy - if you don't have one, he or she should be working with you to establish one. I suggest the policy include language stating homeowners risk the association filing a lien on the house and pursuing foreclosure as appropriate - and then do it.

In my community, we had a homeowner like yours and it took several rounds of liens, her filing bankruptcy to try and buy herself some time (sadly it worked for a while because the bankruptcy court tends to give people second, third, fourth chances, etc.) Eventually, they got tired of her and the last time she filed, the court threw it out and said go forth with that sheriff's sale. At that point, her bank finally stepped in (because they'd been virtually no help up to that point).

I suspect that's what it's going to take to get this person to straighten up. For now, you may have to wait a little because of the COVID moritorium, but that won't last (in fact, I recall it may be ending sometime this year).

AS far as a formal policy goes, your policy might also state payment plans must be approved by the board and its decision is final - then you can state no payment plan will be offered because the person has been delinquent X number of times over the last two years or so. Or you can put certain mandatory requirements on it, e.g. all payments must be made via automatic debit of a bank account or credit card. That way, if the bank draft turns into rubber, you could file a complaint with your local prosecutor and possibly get him/her whacked for wire fraud (because that's technically what it is). It's gangster, but sometimes that's what you need to prompt people to behave
MelissaP1
(Alabama)

Posts:10590


05/19/2021 8:46 PM  
Why does it matter? They pay up? That is what you want. Foreclosure ONLY stops the bleeding. Your HOA is getting paid back or should be in the process of what it is owed. If not, then your HOA may need to make sure it is. It should be getting back the back dues, interest, late fees, and legal/filing fees. It's basically filling in it's own hole.

Plus why in the world would the HOA put in a moritorium on paying dues during Covid? It's ONLY source of income??? Bad idea. If someone could not afford their dues, then have a fund raiser amongst the owners outside of the HOA budget. Otherwise really screwed the HOA's budget.

Former HOA President
EpE
(Washington)

Posts:4


05/20/2021 8:05 AM  
The reason it matters is because the financial impact month to month is devastating on the operating budget. We area small condo association and our condo's were built in the 70's so we have maintenance issues that directly related to the age of our condo's and the small size. $500 has a huge impact on our budget and even after the debt is resolved, like I mentioned above, the damage is done. He/She would never pay their dues if we don't begin the foreclosure process, as I also mentioned earlier, we have been in this cat and mouse game, for several years.

As for the moritorium, it's the State Law here and we have to comply.
MelissaP1
(Alabama)

Posts:10590


05/20/2021 8:33 AM  
State law on HOA dues? Know rent was stopped but not dues.

Former HOA President
EpE
(Washington)

Posts:4


05/20/2021 9:28 AM  
Yes, in Washington State the COVID moratorium unfortunately also applies to HOA dues.
JohnC46
(South Carolina)

Posts:11665


05/20/2021 11:09 AM  
EPE

You need to attach fines, late payment penalties, collection expenses, etc. to the amount owed. Make it hurt to be late.
EpE
(Washington)

Posts:4


05/20/2021 12:10 PM  
I crafted this for our attorneys (used a bit of Sheila from Indiana's recommendations) ...

Chronic Delinquency Special Assessments-- In addition to the general assessments, Chronic Delinquency Special Assessments may be levied against a XXXXX Condo Owner for the purpose of defraying, in whole or in part, the cost of any anticipated or significant legal expenses of the XXXXX Condo Association. A Chronic Delinquency Special Assessment shall be levied only with the occurrence of two HOA delinquencies that have occurred with a 24 month period and have resulted in perfected and recorded liens against a Condo Owner’s property. The Chronic Delinquency Special Assessment payment must be remitted, in-full, within 30 days of notice and its payment will only be accepted via automatic debit of a bank account, or credit card.  Non-payment of a Chronic Delinquency Special Assessment within 30 days will result in a 12% per month interest fee. Chronic Delinquency Special assessments shall also include any cost or charged assessed by the XXXXX Condo Association against a  Condo owner to reimburse the Association for costs expended, if necessary, to bring an owners condo into compliance with this Declaration or for any benefit received by that condo that is not enjoyed by all XXXXX condo as a whole. Chronic Delinquency Special assessments levied against condos shall not require a vote of the Owners but may be approved and assessed by the Board of Directors. 


JohnC46
(South Carolina)

Posts:11665


05/20/2021 12:44 PM  
EpE

States have usury laws (how much interest can be charged) so be careful there. Also why call it Chronic? Penalties should apply to anyone late be they chronically late or not. Amenity use can be cut off if dues delinquent so look at that if applicable.
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