Every community association at some time is faced with a collection problem.
Despite all efforts by the board of directors, there is always at least one
homeowner who refuses to pay assessments. Because the association's budget
is lean, the shortfall by one or more homeowner places a financial burden on
the remaining homeowners who do pay. So, what can the board do?
Almost all governing documents provide at least two remedies:
1) Filing a lien against the owner's property and foreclosing the lien by
selling the property at public auction.
2) Filing a lawsuit against the delinquent owner and obtaining a money
judgment.
Unfortunately, both these options can be time consuming and expensive.
Although the governing documents often allow the association to recover
legal costs from the delinquent owner, there is never any guarantee that a
court will award these costs.
But there's another way! Consider that while the association is foreclosing
or filing a lawsuit, the delinquent owner continues to use amenities and
utilities provided by the association. Suspending amenity privileges to
delinquent owners, like pool access, applies subtle pressure to pay. Often a
portion of each owner's monthly assessment pays for water and other commonly
metered utilities. Consider suspending commonly metered utilities to
non-paying owners.
To ensure that the association has the authority to shut off a commonly
metered utility to a unit, the association can amend the governing documents
to provide for the termination of utility services for non-payment of
assessments. This procedure should provide for adequate notice to the owner
prior to suspending any utility services. Another method is to enact a
Termination of Utilities Resolution. Both governing document amendments and
resolutions need to comply with the federal and state statutes plus provide
for a notice and appeal procedure.
Although turning off the water sounds radical, it is extremely effective in
curing delinquencies. As with any rule, if there is no teeth for
enforcement, some will challenge it all the way. If these personalities live
in your community, consider "drying up" your delinquencies.
For more information on this subject, see www.Regenesis.net.
Published: June 12, 2002
Use of this article without permission is a violation of federal copyright laws.
 Richard Thompson owns Regenesis, a management consulting company that specializes in condominium and homeowner associations. He is a nationally recognized expert on HOA management issues.Regenesis publishes The Regenesis Report, a monthly newsletter for HOA boards, developers and managers. To subscribe, go to Regenesis.net. He can be contacted by email at . |
