What Collection Efforts Can A HOA Use If A Homeowner Stops Paying Dues?
The HOA can always either try and collect themselves or use a collection agency or use an attorney to try and collect those funds. Now, of course, like any other entity that is going to collect, they have to make sure that they don’t run afoul of the credit acts that are federally and statewide mandated. Most of them are federal in nature so that the HOA doesn’t run afoul of any kind of harassment laws pursuant to the collection laws that are in place. But typically the associations will have some plan in place even if they are informal plans and so they will notify the owner and say look, you are delinquent. You either catch up or we are going to transfer this over to our counsel or to our collection agency. If that doesn’t work then they will reference on the collection filed to an association attorney such as myself and then we submit a demand letter.
If it’s an HOA as per the bylaw, you have to give 45 days to the owner to pay the amount of the delinquencies plus any late fees, interest, any attorney’s fees that have accrued based upon that delinquency. If they haven’t paid within the 45 days then counsel sends another 45 day notice saying that we are going to lien the property and we provide a copy of the lien that will be filed but hasn’t been recorded at that point and then if that hasn’t been paid within 45 days then the HOA has a right to foreclose on that property. It doesn’t matter if it’s homestead or not, in Florida you can plead the alternative so the association can actually file a count in the same lawsuit to foreclose and file a count for monetary judgment and then, kind of pick prior to what’s either called the summary judgment or the trial, whichever route they want. So if they want a monetary judgment for their amount of delinquencies, they can get that and try and collect that against the owner whether that’s personally owned or owned by a corporation or an LLC or some other legal entity.
It could also come to a final judgment and the judge could set it for a judicial sale and if another party buys it then the association gets their money plus all the other fees that are owed and the interest on the attorney’s fees. If nobody else bids that amount then the association takes over that property and they can rent it, they can sell it, they can treat it like any other owner would treat it as long as they follow their own rules within the governing documents. So that’s kind of the steps in collections for an HOA.
When Do HOA or Condo Association Assessments Or Dues Become Delinquent?
The imposition of the assessments are controlled by the governing documents. So there will be a board meeting that will have a budget for the next chair and include it in the budget, should be the imposition of the assessments and the board of directors will set the amount of the maintenance assessments and it also may very well depend on the governing documents on the frequency on which they would be billed and if not, then the board can decide how frequently an owner will be billed. So either monthly or quarterly, it’s kind of rare but I’ve seen some of them billed annually as well but usually it’s either monthly or quarterly and they are really due when they are imposed by the association. So as the owner you are required to know when those are going to be billed.
If it’s the first of the month then you owe them the first of the month. There is really no statutory grace period put in and most of the governing documents of associations don’t have grace period put in. In some of them there are but in most of them there aren’t. So it’s really kind of up to the association and board of directors to decide what if any grace period will be given. Now, there always is an argument in court that can be made for reasonableness. So if there is not a statutory requirement for a grace period, if there is not a requirement within the governing documents and a person is one day late and the association decides that they are going to go through these steps, a judge can always say that you didn’t get enough time for reasonableness.
The only issue with that is it’s not going to happen very often. Before it ever gets to court, you have to have those notices that we talked about. So, for an HOA, an owner would have at least 90 days to catch up. Now, they may have to pay other fees along the way that have been incurred for the collection of it but they are responsible for those. In condominium it’s 30 days over 90 days. A 30 day notice to the property owner to foreclose on it and then you can do that so you are usually not going to have a case where you are going to be able to jump right into court without some type of timeframe and a minimum of 30 days, say for a condo. In 90 days for an HOA where they may be able to pay back money but they have to pay additional money and that’s sometimes where the bone of contention comes in because they are going to wait for 3 or 4 day and then there is a late fee and interest tacked on and the homeowner doesn’t think that’s right and the association does.
Guess who gets to decide? The judge. So it’s always a good idea to find out from the management company and a lot of times they will submit coupons and try and stay compliant with those payments when those payments are due.
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