Foreclosure Mess

We have a 90 unit complex in CA. We currently have 5 or more units in foreclosure and these units have not paid association dues. We also have a problem with 6 others who habitually dont pay their dues until the last minute.
How can we speed up the process to collect these dues in less than 180 days. Our PM says our lawyers are working on these cases and that the lawyers get paid a certain percentage of the recovered dues. Seems to me that they wait too long to collect more money. We need help. How can we speed up this process.????

Thanks for the help.

JoeD5,

I’m not familiar with the expiration time of liens placed in CA, but here in the great state of GA, it’s four (4) years. I was notified of such news when I visited our collection attorney’s office!

MelissaP1 has purposed many great questions for you to ponder, before proceeding. First and foremost I would highly recommend filing a lien. Then weigh out the expenses that will accrue to get all the money owed to the association. In other words, if the lien costs you hundreds of dollars to file, you would want to be certain the amount owed is significantly more than, the initial cost of for filing even though the association will be reimbursed, when the association collects, some day!

Unfortunately the process is very slow, beyond ridiculous, but the laws are what they are and in order to recover any of that money an HOA must spend money to make money.

In closing, regardless of what state you reside in you will want to file a lien, on a homeowner with delinquent dues/assessments and in some states fines are owed (depending upon the state)

Best of luck
Chuck W.

Joe - I'm confused by this statement: "Our PM says our lawyers are working on these cases and that the lawyers get paid a certain percentage of the recovered dues." I'm surprised no one has picked up on that. Does that mean then that your lawyers are getting their fee from part of the recovery? And your HOA is just getting the remaining balance, so you are not ending up with the full dues, plus late fees and interest? That is a really unusual situation. Maybe I'm missing something.
I'm not sure how you can speed up the payment from those six habitual last minute payers. If they are waiting until the last minute to pay, that is completely legal. Some people just refuse to pay anything until it absolutely due. If you are running that close with finances, you might want to increase your assessments to give yourself a better cushion. Harold

Everyone here has given GREAT advice! I just wanted to address the lawyer situation. I did notice but there were bigger fish to fry in the post. Lawyers get paid in a variety of ways. Most of the time they charge a "Retainer" and then charge the client by the hour. That hour may include email correspondence, phone call to the office, or the hours spent researching/developing the case.

However, some attorneys may make other arrangements. They may "sans" the retainer fee and share in the profits of the reward. Bigger cases usually work this way. I believe these are called "Contigencey cases". Where an attorney will take on a case contigent on the amount of award upon winning and share in a percentage or share in that. That's why you see these "Multi-million dollar" cases. The lawyers will take the case on and spend their own money on the case. Once they win it, they will get most or almost half the award. Leaving the victim very little.

It's not illegal what your attorney is doing. It's just may not be the best option for your HOA to pay your attorney. Foreclosures don't normally make a HOA money. They are LUCKY to break even. A lawyer willing to do a foreclosure on a "contigency" basis is a bit "fishy" to me. That means they have the "inside scoop" to the property which they can purchase or have a friend purchase at a low price. They can then "flip" the home for a profit. The long about way, they could be "double dipping". It sounds a little too easy to have an attorney soo willing to "work" these cases.

Is the attorney you hired a Real Estate attorney by chance? The HOA should have an attorney that's more Corporate/Contractual discipline. I have a STRONG suspicion this attorney may indeed have his hands more on the "Real Estate" side of the lawy. Definetely shop around for an attorney that's truly in it for YOUR interest and NOT their own. Doing this for "Free" until they can "share" in the profit, isn't be as "Free" as you think it is.

JoeD5
I am a President of a HOA in New Jersey. There have been many good ideas here.

We pay here monthly, and it's $145.00 per month, with a $25.00 late fee. When they reach the $300.00 amount, we start with a reminder, and after 15 day's, if we don't hear from them, turn it over to our attorney.

We always start with liens, and the HOA pays all attorney fee's, while they are in legal. We have also had sherriff sales on homeowner cars, and that does tend to get the homeowners attention. This usually works after the liens have already been placed on the unit, and with that, they will have a harder time buying a new car. Sometimes they come out to the sherriff with a check in hand. Besides that, the auction takes place right outside their home. The car has a wheel lock well ahead of time.

A few years ago, our delinquency was at around $170,000.00 dollars, and in a few short years, it is now down to around $50,000.00. We have made huge strides, but have much more to do.

In the last 2 years, we have put around 8 in forclosure. 3 of those, did manage to come up with the money, to save their homes, and the rest are still pending.

If you are paying quarterly, I would suggest going monthly. It seems a little easier to collect the fee's, with only a couple of months being owed, then 6 months, etc being owed. We are also considering raising the late fee.

It also helps, if the lawyer has as much information on the homeowner as is available, such as make of car, license plate number, bank account information. We now make a copy of all homeowners checks, so, and place in the homeowner file, in case the account number is needed by the attorneys, for future action. It helps with bank levy's, and wage levy's. Hope some of these idea's help.

JoeD,

Check your doc's for an acceleration clause. We have accelerated a few consistantly late homeowners dues for a 1 year period. We have a clause that provides us this but only if the HO is late. It does not say how many times late, but we use a 4 quarter basis. This has brought down our late dues dramatically. The last quarter after 30 days we had 4 HO's late with another 4 HO's with a lien status or foreclosure. This is 1% of our receivable HO's.