Condo Association Management Blog

I would NOT do it-you will likely get sued BUT the association is not a debt colector so is not violating the FDCPA. The attorney would be. The manager MIGHT be but the assoiation would not e violating that act but would be looking for a lawsuit. 
 
 
 
Stephen Marcus  
 
Marcus Errico 
 
Braintree, Massachusetts 
 
781.843.5000

I wouldn't take the chance - but you can make a spreadsheet of all the owners - no names - we made one and we had months where we were in arrears between 4 and 12,000. Can you imagine the Board kept telling us that our finances were in great shape - until we discovered that they were letting some of the owners side and did nothing about it. And then they fine us for putting up some Christmas lights on our deck in the back of the building and threatened to place a lien on our property if we didn't pay up.  
 
It finally was dealt with when we sent a demand letter that this be remedied by a certain date. No names out to the public, just a running spreadsheet with the dollar amounts which spoke for themselves.

I would not post the names, though I used to belong to a private club that did post the names of delinquent members.  
 
But, what is probably illegal is your property manager's or the Board's favoritism.  
 
Every member must be treated exactly alike. It's hard to do. there's an elderly couple on social security that is far behind on their maintenance payments and a millionaire who is also behind. Both must be treated the same--collection letters, liens, etc... 

I would not post the names, though I used to belong to a private club that did post the names of delinquent members.  
 
But, what is probably illegal is your property manager's or the Board's favoritism.  
 
Every member must be treated exactly alike. It's hard to do. there's an elderly couple on social security that is far behind on their maintenance payments and a millionaire who is also behind. Both must be treated the same--collection letters, liens, etc... 

Please download your state's condominium act. You will find the answer to the collection of delinquent monthly condo fees therein.To download put the following infto your browser 
 
 
 
(State Name)condominium Act.com

made error in last post. Please download following 
 
 
 
(State name)HOAAct.com

I agree with Stephen. You are a first party collector so you are not governed by the FDCPA. However, if you take actions that would violate the FDCPA if you were a third party collector, you woulld likely be sued by nearly everyone on the list. It's also possible that the plaintiff's attorney would seek to have a class certified and then you'd be defending a class action suit. Whether its multiple individual suits or one class action, it would be dearly expensive for an association. 
 
A great alternative would be to simply hire a collection agency to go after the debtors. Then, the agency is calling the debtors every other day and it working out the payment plans on your behalf. 
 
Darron Hay 
 
Assessment Recovery

Follow the directions given in your state's HOA Act.

Be careful about simply relying on your state's HOA or Condominium statutes. I have yet to read one that mentions anything about the FDCPA or the FCRA. While I haven't read all of them, I have read about a dozen as well as the Model Condo Act. NONE of them mention the FDCPA or the FCRA. These two statutes will be the basis for the plaintiff's cause of action (basis to sue). 
 
As always....I'm not a lawyer and I know nothing. Please consult your lawyer regarding the legalities of collecting debt for your association and the applicability of the FDCPA to your scenario. 
 
Darron Hay 
 
Assessment Recovery

Law firms do not agree with your opinions....see this blog ....3rd from the top. 
 
http://www.floridacondohoalawblog.com/2009/06/

Joyce: 
 
I'm not sure if your comment was directed at me, but I read the post and it supports almost exactly what I said. The post quotes the FL statue on the collection of debt in FL. Every state that I know of has a consumer protection statute which mirrors the FDCPA. This was done because the federal FDCPA is not applicable to first party collectors but most state consumer protection statutes are. So while the cause of action may not necessarily be listed in the plaintiff's complaint as the FDCPA, it's nearly certain that language which originated with it and was subsequently adopted by the legislature in the name of consumer protection will be cited in the summons. 
 
I'd certainly be interested in what opinions I expressed which were not supported by law firms. From my reading, we both said practically the same thing. 
 
Darron Hay 
 
Assessment Recovery

I share your opinion.

I know of a few condo association's that issue a complete list of all delinquent homeowners and their names and amount in arrears. It helps with peer pressure to have this list handed out at the board meetings. No one has ever sued over it and it is the policy of this HOA for over 20 years.  
 
I have not consulted with an attorney over it, but I think the person that emailed above and said that it was a financial regulation for privacy but I doubt that it is a problem, since I've not had any lawsuits about it. State laws vary so it is best to ask a real estate attorney, but I can tell you it is very effective in getting past due homeowners to pay when due.  
 
On another association I manage, the president is the only ones who has the list of names and arrearages.

With this particular Association, the financial information is found in the Regular Meeting Minutes and posted on the Association's online website and therein contained is the individual homeowner's name and financial information as it pertains to their delinquency - while at the same time within the same Minutes the BOD goes to great lengths to protect the identity of other homeowners who have, say an Architectural Violation! I would think this detailed, private financial information should be discussed in Executive Session, eliminating the "need" for it to show up in Regular Meeting Minutes (their excuse to post). Worse yet, the information the Secretary of the BOD has decided to share in the Minutes is full of inaccuracies, including wrong lien dates on individual lots (confirmed with County Recorders Office) - probably so the BOD looks as though they take swift and uniform action even if liens are months later, as well as partial "explanations" on behalf of owners for their unpaid assessments! They've been warned by a member to remove the Minutes but have not responded and left the Minutes up.  
 
This HOA is in Washington State, they are self managed and all correspondence derives from the BOD. They pay an attorney hourly, but the attorney does not write the letters. They then charge the delinquent member a "legal fee" payable to the Association. The Association pays the attorney up front for services, hoping for reimbursement. It seems unusual, I don't know why they don't turn the account over to an attorney's office for collections at some point and then no more interaction with the BOD should take place with the delinquent homeowner and the Association. It comes across as some sort of power trip.  
 
I have not been able to find any information on FDCPA regarding HOA's. 
 
The neighborhood has homes that originally sold in 800-1.6k range

If all collection efforts derive from the Homeowners Association's Board of Directors and they are not utilizing an attorney or collection agency except to file/release the lien, wouldn't they be classified as a Collection Agency? The members never has any contact with the attorney. 
 

Sharon: 
 
No, the association would be a first party collector not governed by the FDCPA. 
 
Kathy: 
 
You stated it's an HOA in WA which is governed by RCW 64.38. Assuming it's not a condo then I would say there is nothing in 64.38 which explicitly prohibits what this board is doing. Now, if I were on the list, I would file suit based on unfair trade practices under RCW 19.86.093 and claim that the publication of a list was designed to ruin my reputation or it would be libel if it were inaccurate. I would gladly take my chances in superior court based on RCW 19.86. If it's unfair and illegal for a third party to do it [RCW 19.16.250(3)], then I'd gladly let the attorney claim it's unfair for a first party if the intent is malicious or non-uniform. You said they protect ACH applicant's identities but not debtors. That could easily be construed as malicious any day of the week and twice on Sunday. 
 
Darron Hay 
 
Assessment Recovery

I am on the Board of a 104 unit condo in MD. At least in MD, once someone has a JUDGEMENT against them, it is PUBLIC RECORD. Collection agencies, credit reporting bureaus, etc. have access to this, as does basically "the public". At that point, the info is PUBLIC. I would imagine if you wanted to hire a pilot to write their names in the sky you could, although I doubt if many do it! You certainly could post this info on a community board. We are getting away from LIENS, because they simply sit there doing nothing to collect money. We are doing collections and considering restricting parking. Keep in mind that a LIEN is against the property and NOT the person. A lien is the same also, it is PUBLIC RECORD. Thanks and good luck!

I suggest you check with the insurance compant who issue your HOA policy. If the names of deliquents were poste4d and that resuklted in law suit it is most probable that your insurance carrier would have to bear the costs of defending that suit. In any event there is no legal bar to publishing the names of delinquests.

What if the property manager prepares the spreadsheet that just shows the unit numbers and NO NAMES? 
 

Omotting the names makes your proposal useless. Pubolishing the name or even threatening to publish names of delinquents has a very strong message to thos unit owners. Peer pressure is a powerful aphrodisiac!

Elaine: 
 
If you have the ability to figure out who the debtor is, then it could be an actionable violation under the FDCPA. I like Charles' idea of checking with the insurance carrier. I doubt the liability and the legal defense would be covered by the carrier for such wonton negligence on the part of the board. 
 
Darron Hay 
 
Assessment Recovery

You Absolutely Can have delinquent HOA dues credit reported. We do it all the time. The best service to use to collect and report non-paying members is called a 'dunning service'. Dunning differs from a collection agency in that the HOA retains all rights and ownership of the accounts, thus the delinquent members pay the HOA directly. At the same time dunning services must comply with the FDCPA. There's also no commission for a dunning service; only a small flat fee. Combined with other aspects of dunning, credit report is very effective. Mr. Day (above) is correct. Today you have to go after the person... not the property. There are just better and less expensive ways to do it than judgments and liens. [You can reply to this post with questions, I'll be emailed and will respond].

Mr. Day 
 
You are absolutely correct. Just another example of percieved political correctness trampling on the rights of the majority!

Mr. Slater: 
 
 
 
I am a Board member of an HOA located in the state of Florida. My understanding was that both by Federal law (FCPA) and state laws, HOAs are not allowed to report delinquent assessments for the three major credit bureaus (Experian, Transunion, Equifax). Are you able to do so because of the state you are located in allows you to do so?

Mr. Muniz, 
 
I don't know where this misinformation is coming from regarding reporting HOA fees. It is absolutely available to do in all 50 states - and we do it every day. We're not new at this either. We're a 27 year old firm. The FDCPA, which I've read on more than a few occasions, states nothing about HOA dues. Florida law does have some ticklish areas, but does not preclude HOA's from collecting their dues. In fact, we have a rather large Property Management Firm in Florida that just contracted to use our dunning services.  
 
Dunning is a service where collections are done on your behalf (as opposed to a collection agency, where you must sign over ownership of the accounts). With a dunning service you get paid directly, and dunning uses all the tools available to see to it you get paid (credit reporting, skip tracing, etc.). It's also considerably less expensive than working with attorneys. 
 
Feel free to call me with any questions or concerns at 800.441.6005 x107 if you like. 
 
Kindest regards, 
Richard

Richard 
 
hanks you got it exactly right.

Scott: 
 
The only part of Richard's answer which can be improved is that not all collection agents require the assignment of ownership on an account. We don't. We simply act as the third party agent for the client while they maintain ownership. I would submit to you that all collections are on behalf of the client (association) unless the client chooses to sell or assign the debt to an agency or other third party. 
 
The only real benefit of assignment is that it allows my staff attorney to represent my company in court whereas if the debt is not assigned, the client foots the bill for the attorney. 
 
The drawback to an assignment is that when I own the debt, my E&O and malpractice generally won't cover a claim against the client by a predatory plaintiff's attorney because the client no longer owns the debt. However, if I'm only the agent, my insurance will indemnify the client. 
 
Very Respectfully, 
 
Darron Hay 
 
Assessment Recovery

Mr. Hey, 
 
You're correct, however there are other implications as well. When the debt is assigned or pledged it drastically reduces the HOA's control (as control is now in the hands of someone else). This can really convolute the waters in situations like a short sale. Assignment also obligates the HOA to pay the collection agency at any time in the future that the debt is paid, whether or not the agency actually did anything to cause that debt to be paid. 
 
You are correct that - prior to litigation - the best answer is to hire a firm to act on the HOA's behalf, without assigning or pledging the debt to anyone. It's rare to find a firm like ours that will utilize skip tracing, letters, a phone campaign, attorney written demand, and credit reporting without having the debt assigned to them. In fact most collection agencies won't put any real effort into an account unless it's at least a few thousand dollars. That's why so many HOA's are finding neither the attorney route nor the collection agency route effective. And as I wrote in a recent newsletter for CAI www.ncspinc.com/CAI-newsletter.pdf], collection attorneys who 'stack their fees on top' are only making the debt harder to collect - which is a bit of a Trojan Horse for an HOA. (I'm referring to those attorneys who do so prior to going to court). 
 
What I'm proposing is a solution that is so inexpensive and effective that it can be utilized early in the debt cycle, prior to litigation. A dunning service does that, and does so for a small flat fee, with no commission, and no assignment of accounts. 
 
It's the best of all worlds for today's HOA's - and I'm delighted to see you operate along similar lines. 
 
Kindest regards, 
Richard

This is a perfect example of imperfect advice given by people who are not professionals. Reading through the comments leaves one with contradictory advice. Someone with proper credentials should take hold of the question and answer it knowledgeably.

For Darron: You very ably closed the last loophole. The professionals have spoken correctly

Under FDCPA you have rights to sue harassing Debt Collectors...