assessment collection -condo
Remedies and procedures for collecting delinquent assessments, charges and fines from owners in a condo association.
The first remedy against delinquencies is to make sure the association has procedures for: (1) identifying accounting errors, (2) maintaining accurate mailing addresses and contact information for owners, and (3) what happens when an account becomes delinquent. The process of collecting delinquent assessments should be made known to all owners in order to achieve a deterrent effect. Problems collecting assessments can arise when an association has poor records or insufficient or ineffective procedures for collecting delinquencies.
When an owner becomes delinquent and fails to respond to notices and letters, it is important that the board fulfill its fiduciary duties and preserve the association's rights by pursuing the association's legal remedies. These remedies include, among other things, attorney demand letters, recording a notice of lien, pursuing an action in court (lawsuit), foreclosure of the lien by selling the owner's property, collecting directly from the tenant the rent that the tenant pays a delinquent owner/landlord, and suspending the owner's: (1) membership rights, (2) HOA-paid utilities (such as cable or water), and (3) right to use recreational facilities.
A fine levied against an owner becomes a lien against that owner's lot or unit once the time for appeal described in the law has expired and the owner did not initiate a civil action (lawsuit) challenging the fine within that time. The "time for appeal," if the owner:
- does not timely request a hearing, is 180 days after the day on which the time to request an informal hearing expires, which is 30 days after the day the owner receives notice that the fine is assessed. Thus, because written notice by an association to its members is effective when mailed if addressed to the member's address shown in its current records, the time for appeal is 210 days after the day that the association mails notice to the owner that the fine is assessed. (Regarding when notice is deemed effective, see footnote 1 to Section 57-8-37 or 57-8a-208).
- does timely request a hearing, is 180 days after the day the owner receives a final decision from the board. Thus, the time for appeal is 180 days after the day the board mails notice to the owner of its final decision (or 180 days after the hearing if the board gave the owner its final decision at the hearing).
Once a past-due fine becomes a lien, a notice of lien may then be recorded against the property. However, an association may not nonjudically foreclose its lien for unpaid fines, which means the association trustee may not simply hold a public auction (trustee's sale) of the unit. The association must file a lawsuit and obtain a judgment for foreclosure first.
Shutting Off a Common Utility or Recreational Use
The law allows an association to turn off any common utility service to a delinquent unit or lot for which the association pays, or access to recreational facilities, if the association's governing documents authorize it. Resolution 4 offered by this site contains the necessary authorization, and the notice to the owner required by law is included as a template, as well (see "Resolutions and Templates" available in the Prudent-Legal plan).
The association's attorney can work with the board to ensure proper notice is given to the owner and the proper procedure is followed before suspending the service. This can be a very effective tool for the association.
Using an Attorney
Utah law provides that homeowners associations are entitled to recover their attorney fees and costs from the delinquent owner. So, there is little excuse for not using an attorney to effectively pursue delinquent accounts after the association's efforts have gone unheeded. Failing to use an attorney, or using one too late, can lead to more cost, time, and lost money for the association than if an attorney had been utilized. HOA attorneys generally defer billing the association until money is collected from the owner, saving the association upfront costs. Additionally, unlike a collection company, an HOA attorney doesn't take any of the principal owed, so the HOA gets paid everything that's collected, minus attorney fees and costs.
Turning Account Over to Attorney
At what point a delinquent account should be turned over to an attorney is
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(For reference: 57-8 is the Condo Act, 57-8a is the Community Association Act, 16-6a is the Nonprofit Act)