Collections
Hi Dennis, We have one member in collections for nonpayment of assessments for nearly 3 years. In reviewing the Collection firm documents, this is not a good idea. I see why Management companies do this, but it’s not for us self-governing. Since the management company was representing us when they placed this with the firm are we bound to them? When I asked for their fees and schedules the documents all required signatures. If we terminate, we pay all their fees, it seems. We plan to move forward on a lien. After reading their paperwork, I am not sure if we get payment from a lien they will expect to be paid for their costs/fees. Are we stuck? The outstanding debt is about $900. Thank you for any insight.
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Brenda,
The assessment lien belongs to the association. You are allowed to pass on all cost the association incurs to collect that assessment as part of the assessment lien due by the homeowner. This lien is statutory and does not need a court order or to be recorded against the property to be effective. You have the authority to foreclose for any amount greater than $1,200 or one year’s worth of assessments whichever is first. The thing is you decide what you want to do with this delinquency, not the management company. I suspect if you have not assigned this collection to an attorney that you have already paid the community manager for any service, they provided relative to collection and notice activity over the last three years. If the community manger assigned the lien to an attorney, they had no authority to do so without your approval and authorization, it was not their lien to assign to an attorney it was yours. Provide me anything you get from the management company, and I’ll look it over and give you, my recommendation. Send it to AZHOAtruth@gmail.com.
You must act to claim the lien either by a monetary judgement or foreclosure action within 6 year of the initial assessment delinquency or you are barred from collecting on any amounts more than 6 years old.
Dennis
Hi Dennis, I don’t have the file with the collections docs. I appreciate your offer to look them over, should I get them. This IS in collections and the management company has been levying fines all this time. I think the Board is considering terminating the collections, my part is fact finding, once again my appreciation to you!
Thank you!
Brenda,
That is fine I do not need to see the files. The important thing to remember is that the reasonableness of any late fees or collection cost is at the discretion of the Board. The management cannot under Arizona assign fines for late assessments. You can apply a late fee of $15 or 10% of the delinquent assessment payment as a one-time fee. Collection cost is then based on reasonableness and actual expenses of the association or fees directly applied by the association if you do not use a collection agency. If the management company incurred cost you will have to pay for that cost and pass it on to the homeowner, however if the management company applied fees you can drop those fees at your discretion without paying the management company. Like i said earlier if the management company engaged a collection agency without board approval, then those cost are on them and not your association. But you would have to verify that to make sure that some board members did not give verbal approval without a formal action of the board. While no board member has this authority, it still happens often and may still result in the association being liable for the cost.
Let me just say that I really like what you and your association are doing. It is a lot of work, but you are taking it on for the good of your community. I really wish more communities thought like this. I will gladly travel to your community and work directly with your board free of any charge, to help them in any way that I can.
Dennis
Dennis
Thank you Dennis!
I do pass the word about self-governing at every chance. I appreciate your guidance – I need to find the answers. The management was heavy handed and not forth coming. Their late fee schedule doesn’t even follow what they provided. The board has forgiven one member’s fees after investigating. This one collections file still needs more review.
And thank you for your generous offer. I will let the board know!