collecting unpaid dues

Started by ElaineO • 3 replies • 1367 views

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ElaineO (California)
Posts: 1

Posted:

I am a board member member of an HOA in CA. Our building has just four units. One of the owners does not live onsite, and does not pay his dues or other assessments. Twice in the past four years we have had to initiate forclosure proceedings. Both times he has waited until the last minute before settling his account. Then the cycle repets itself.
Once again, we have had to take action against this owner. Not only does this require a lot of time and aggravation on the part of the rest of us, we are always operating at a financial disadvantage.
Existing laws seem to favor the individual owner. Does anyone know of something an HOA can do to require that dues be paid by the renters of a unit owned by a consistently delinquent individual?
Do we have any other recourse?

I welcome any suggestions.

Elaine

HaroldS1 (Arizona)
Posts: 314

Posted:

There was just recently a discussion here about trying to get renters to pay the assessment and withholding it from the owner. Can't be done. The renter would be in violation of his lease agreement. And anyway, your contract is with the owner. You need to look to the owner for payment. Are you loading the legal interest, late fees, and penalties onto the owner?
Why are you waiting so long to foreclose? Your new CA law allows you to foreclose for any amount after being delinquent 12 months.
I can't imagine why he wold do this unless he is making a better return on that money than what it is costing him. Can you find out what he's investing in and let me know? Harold

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Why are you taking the drastic step of foreclosure? Are you not liening the property first? However, it does appear the threat of foreclosure does get the job done in your case.
What worried me about your post is that your HOA is operating in the "red" if this person doesn't pay. It may be time to re-evaluate your dues collections. The HOA dues should be collected so that if a small percentage doesn't pay, they can still operate. Out of 107 home in my community, I knew atleast 5 - 7 would not pay their dues monthly. Some were just late while 2 never paid.
I would consider raising your dues a bit to cover a non-payer plus maybe add in a few "improvements". The amount would have to be voted in. I would figure the budget for 3 instead of 4 but still split it 4 ways. This still makes the other owner responsible for paying at the higher rate plus legal fees once you pursue yet again his back dues.

Former HOA President

JM2 (Oregon)
Posts: 439

Posted:

Hi Elaine:

You might want to see if there is any provision in your documents to accelerate the payments for the year (assuming you pay monthly) if dues are delinquent. That way, once the delinquency occurs for the year at the end of January, the board could declare the whole amount due and payable at that point, and start collections on the whole amount.

If you don't have that in your docs, you might want to talk to your association's lawyer about drafting an amendment.

Also, you might want to budget for some contingency funds - perhaps to cover any insurance deductibles you might have from time to time, and save up the money for those, but be able to use it to cover the times when an owner is in delinquency.

Some documents do have a provision that an association can require payment of the rent to the association if there is a delinquency; check that out with your lawyer as well. It may be worth amending your documents in this way as well.

Best of luck!

J. Patrick Moore, CMCA

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