Condo Association Management Blog

I think you need to have this conversation with an attorney. This is not a topic for a Blog. I would guess you need to take care of business and pay what you owe to remove the lein. Than an Attorney can advise you if you have a legal standing for a legal action against your fellow owners.  
 
Keep in mind that YOU caused this action. Some owners forget that they have an obligation to the other owners to pay their fair share, ON TIME, to support their community. Paying is not an option.

Amen Mr. Larry Wiess. Sound sage advise given.

Look at your bylaws and your State Condominium Act for details pertaining to liens. Alsocheck with your management for the name of the Associations attorney;s and ask them about these fees.

I agree. You have got to pay what you owe. I am on the BOD of a self managed board, and those that refuse to stay current are the bane of my exsistance. We currently have lawyers involved. That was only after asking and continual threats of further action. Its very taxing on us as volunteers to do all of this. I have no sympathy for you.

It is unlikely that there is a legal obligation to notify you in writing prior to placing a lien on your property. However, most management companies will try and make contact with a non-paying owner first to avoid the trouble of preparing the documents etc. Owners that ignor such contact are only putting their head in the sand, and will not avoid a lein.  
 
 
 
Typically speaking, by buying into an HOA or condo association, there is an automatic financial obligation for which there is an automatic lien - check your docs. 
 
 
 
Your governing documents probably also provide for you to be responsible for any costs associated with the collection of monies due and owing. This includes legal fees etc. Unfortunately the association is not obligated to use a less expensive attorney. Some fees can be negotiated down if you respond in a diplomatic calm and timely manner.  
 
 
 
Once your balance has been paid in full, the association is obligated to have the lien discharged.  
 
 
 
If you feel that you have somehow been "wronged", you should seek the advice of counsel. 
 
 
 
The foregoing is not intended to be construed as legal advice which can only be provided by a licensed attorney in the state in which you live. 
 

The association is entitled to collect interest. They are also allowed to charge late fees and attoney fees and costs. This accounts for the variations intiotal charges you cite. Remember you are the delinquest and you have to bear the burden. You will not be able to invalidate this lien nor its charges

It is a pity that owners do not realize they are making things harder for their neighbors when they refuse to pay their fees, pay them in a timely manner and then force their Association to protect their interest by seeking legal remedies. These owners still feel they are entitled to the services that their fees pay for. You knew you did not pay so why should you have to be notified? Check your Association documents, I'm sure they have a section pertaining to delinquency and notification, and better yet consider your fees an extension of your mortgage- you know it's due monthly! The lien will be released when you pay the balance current.

This topic makes me wonder if condo HOAs shouldnt have a system whereby owners can be rewarded for paying their condo fees ahead if time. It could be arranged that, for example, condo fees would be reduced by a certain amount for each month that they are paid ahead of time. Let's say an owner agrees to pay one month ahead of time. He or she would be able to reduce the amount by 2 or 3% or any amount that's agreed upon that would work as an incentive. If fees are paid 2 months in advance, the reduction would be higher and so on. This would save the association legal fees and the costs of putting a lien on the property, at least for the time HOA fees are paid ahead. Meanwhile the HOA has use of the money it wouldn't have if the HOA fees are paid In the month they are due. The HOA could also collect interest on the amount. (Interest rates are worth next to nothing right now, but they'll probably go up). It seems to me that this idea would be a win-win for both the owners and the HOA. Does anyone see a problem with this idea? 
 
.....

TO LOUISE 
 
 
 
After reading your response, I thought you may be looking at the payment of HOA fees like a rental situation. Reality is; you are an OWNER, not a tenant. The fee is the owner's obligation to neighbors and business partners in this association. This is a serious business relationship. It's not the same as getting a rental discount for early payment to a landlord. YOU ARE ALL OWNERS AND PARTNERS. That's like paying your husband to do chores in his own house. That just doesn't make sense to me. Perhaps I just don't understand your point.

Response to Larry Weiss. I realize that, but when you take out a loan or mortgage the situation is similar, we have a similar obligation to the bank or credit union and the other users or owners of those institutions. Yet they allow pre-payments of the monthly obligations and they give incentives. I see no reason that the same thing couldn't be done for HOA fees. HOA fees are not some other kind of obligation. People who have bought a condo also usually have mortgages which they can pre-pay if they wish--and the save on the interest. Owners have an obligation to pay their mortgages as well as their condo fees. I don't see a lot of difference. It's a different kind of contract, yes, but it all boils down to the same thing. Do you really think there is a practical difference? Your analogy to paying a husband to do chores doesn't work. If a husband does chores instead of paying someone else both husband and wife save money on the deal. The wife doesn't have to actually pay the husband to do them for both to get the advantage. In an HOA both the owners and the HOA would get an advantage if the owners prepay, just as the husband and wife get an advantage if either does the chores. Husbands and wives have contracts, too, and a moral obligation to fulfill them, but there is no rule that they can't save money in the process.

Louise, 
 
 
 
Does your mortgage co. give you a discount if you pay 2 or 3 months in advance -- I don't think so. Actually it would be a violation of the CCRs to give someone a discount for paying their assn fee several months in advance. I'm sure your docs say all members pay the same amount and it doesn't say a discount may be offered for pre-paying. I was treasurer of a small self-managed assn and we had a number of members who paid the whole year in advance. Remember, those fees are calculated so that the total amount expected to be received in a year totals the total expenses for the year. If discounts were given there wouldn't be enough money to pay all the expenses which would mean a higher burden on the members who didn't prepay. Would that be fair? I think not!!

In answer to the OP's question. The lawyer's fees are generally the same regardless of the amount owed. They usually have set fees for the various services they perform; i.e., demand letter, filing a lien, etc. The court fees are also set and passed on to the delinquent h/o. As for noticing you before filing a lien, I find it hard to believe you never received a notice of non-payment or a notice that a late fee was being charged. Most lawyers send demand letters and notice of lien letters.  
 
The only way your lien will be released is to pay the balance in full. Once you've done this you should check to make certain a release has been filed with the clerk of the court. BTW, payment in full includes court costs and attorney's fees.

Mary wrote: Does your mortgage co. give you a discount if you pay 2 or 3 months in advance -- I don't think so. 
 
 
 
Louise: Yes it does. So does yours. You would save on the interest you'd have to pay because your mortgage would be paid off sooner unless you have a clause in your mortgage contract that prohibits or charges extra for prepayment. "No Prepayment" would also mean you couldn't sell your unit and pay off the mortgage with the proceeds.  
 
 
 
Mary: Actually it would be a violation of the CCRs to give someone a discount for paying their assn fee several months in advance. 
 
 
 
 
 
Louise: Only if it's specifically not permitted by the CC&Rs. You shouldnt assume that all CC&Rs are written the same way. 
 
 
 
Mary: I'm sure your docs say all members pay the same amount and it doesn't say a discount may be offered for pre-paying.  
 
 
 
 
 
Louise: Our CC&Rs don't mention it. They don't say no discount can be offered. They say nothing about discounts at all. 
 
 
 
Mary: I was treasurer of a small self-managed assn and we had a number of members who paid the whole year in advance.  
 
 
 
 
 
Louise: Then you are saying that prepaymentis possible and practiced in condos after all.  
 
 
 
Mary: Remember, those fees are calculated so that the total amount expected to be received in a year totals the total expenses for the year. If discounts were given there wouldn't be enough money to pay all the expenses which would mean a higher burden on the members who didn't prepay. Would that be fair? I think not!!  
 
 
 
Louise: It wouldn't be a higher burden if it's worked out correctly. the HOA gets a financial advantage to having the money earlier and they save on legal and lien fees. I never suggested that the HOA be disadvantaged for offering discounts. If it's worked out properly, the HOA would not be getting less from any owner. It would all come out the same in the end. The owner gets an advantage and the HOA gets an equal advantage. Nobody would be getting less and nobody would have to pay more.  
 
 
 

Louise,  
 
Your idea will not work. HoA budget is based on a certain amount of assessment paid by all owners. Just because you paid early your association expenses didn't go down. To cover them a full amount needs to be collected.  
 
MoSt HOAs are member benefits nonprofits and as such they can't invest assessments for the most part.  
 
If you show me a bank that pays 1-2% MONTHLY interest (the discount rate you suggested) I will appreciate it :-)

My Board of Directors have a schedule for collecting arrears and it's very aggressive. We notify via a late letter which gives 30 days to bring account current after which we proceed with a demand letter from our attorney giving 45 days to bring current or make a contract, at their expense or lien will be filed. If we have no agreement we file our lien and after 45 days of the date lien is recorded we foreclose on property and no agreement will be considered. After final judgement and title transfer the Board proceeds with action to collect on our judgement against the owner, freezing their bank accounts, auction of all property they have any equity in and attaching wages. To sum it up the delinquent owner will be in foreclosure within 4 months of failure to pay. Up to the time of foreclosure we give notification to deliquent owner several options to make arrangementsa and the consequences of non action. We have foreclosed on 4 units which we current lease. As you can see the Board has a fiduciary duty to our membership and will not tolerate freeloaders and squatters. As I have mentioned to the Board I am not my freeloading brother's keeper when it comes to matters such as this.

Louise, 
 
 
 
Saving on interest paid by prepaying your mortgage is not the same as prepaying your HOA fees. Your HOA obligation is not a set amount. In fact, the fee you pay is based upon the assn's expenses for the year divided by the number of units in the assn. The fee could change from year to year. And to say a "no prepayment" clause in your mortgage means you cannot sell your unit and pay off the mortgage is just plain ridiculous. Prepaying your mortgage is just not the same as prepaying your yearly HOA assessment -- it's like comparing apples to oranges. If you can't see this, I'm sorry but you have a real stumbling block. 
 
I certainly do not assume all CCRs are written the same. But I do know that most do state that all members pay the same amount except for some condos that prorate the assessment based upon the sq ft of the unit, but even then each member pays the same base rate. 
 
Since your docs do not say a discount can be offered for prepayment then you cannot offer one. You cannot do something that your docs do not allow.  
 
Of course prepayments are possible. I can't imagine why an assn wouldn't accept a prepayment. What is not possible is offering a discount for prepayments. 
 
You may not have suggested that an HOA is disadvantaged for offering discounts, but in reality it is. The income would be lower, resulting in a shortfall at the end of the year. Remember the assessment is based upon the total expenditures budgeted for the year divided by the number of units. Everyone would have to pay more each year to make up the difference from all those who are receiving a discount for prepaying. In fact, depending upon how many members would take advantage of the discounted fee, you may end up paying a higher assessment than you would have if the fees were not discounted. I don't understand why you cannot see this. BTW, the legal and lien fees are passed on to the delinquent h/o. The only time the HOA loses this money is if the account has to be written off because it's been determined uncollectible.

Jeff Ross wrote:  
 
 
 
Louise,  
 
 
 
Your idea will not work. HoA budget is based on a certain amount of assessment paid by all owners. Just because you paid early your association expenses didn't go down. To cover them a full amount needs to be collected.  
 
 
 
Louise: I'm not sure that is always the case. Mary said she was treasurer of an HOA that allowed people to pay a year in advance.  
 
 
 
Jeff: MoSt HOAs are member benefits nonprofits and as such they can't invest assessments for the most part.  
 
 
 
Louise: OK, I will take your position as correct if you are sure.  
 
 
 
Jeff: If you show me a bank that pays 1-2% MONTHLY interest (the discount rate you suggested) I will appreciate it :-)  
 
 
 
Louise: If I said that I didn't mean to. I actually meant 1% a year. However, most are not even paying that much. As I said, I expect interest rates to go up.  
 
 
 
You haven't addressed the savings an HOA would likely garner if they didn't have to deal with delinquencies and liens on a particular unit. I think my idea could be arranged if all the members agreed to it. Whether they would or not is of course not known. 
 
 
 
Thanks for your good posts on this blog.  
 
 
 
*******  
 
 
 
 
 
From:  
 
 
 
Jeff Ross  
 
 
 

Larry, do you foreclose on units where owners are upside down on their mortgage?  
 
Do you go for judicial foreclosure to be able to proceed with other ways of collection?

I'm don't intend to debate the pre-payment issue further but I wanted to clear up one thing. When I said a no pre-payment clause would mean you couldn't sell your unit and pay off the mortgage, I meant you wouldnt be able do it without paying a penalty, not that you couldn't do it at all.  
 
"What Is a Mortgage Prepayment Penalty? A prepayment penalty is a provision of your contract with the lender that states that in the event you pay off the loan entirely, you will pay a penalty. Penalties are usually expressed as a percent of the outstanding balance at time of prepayment, or a specified number of months of interest." 
 
http://www.mtgprofessor.com. 
 
Many don't allow a prepayment of even a monthly payment without a penalty.  
 
************

Louise, 
 
 
 
I know you said you don't want to debate this further, but there are a few things I'd like to say. 
 
Your mortgage and your HOA assessments are not the same. Period!! 
 
Jeff said: "Louise, Your idea will not work. HoA budget is based on a certain amount of assessment paid by all owners. Just because you paid early your association expenses didn't go down. To cover them a full amount needs to be collected. To which you answered: I'm not sure that is always the case. Mary said she was treasurer of an HOA that allowed people to pay a year in advance."  
 
Those members in my former assn who paid in advance were actually doing the assn a favor because the extra money was available sooner. Also, those members did not receive a discount because they paid in advance; they paid the full amount of the assessment. We also had some members who paid several months in advance or a quarter at a time.  
 
The last thing I would like to point out to you is that IF an assn were to give a discount for prepaying I doubt that would lessen the number of delinquencies. If a person is having trouble paying one month how would they be able to pay two or more months at a time? The assn would still be faced with trying to collect delinquencies and incurring attorney fees. And on top of that the budget would be out of whack because of the discounts allowed on the prepayments. 
 
 
 

Mary, you make some good points.  
 
Louise

Thank you, Louise. I'm glad I was able to help. HOA's are a whole different animal and sometimes it takes awhile to figure out some things. :-)

although i do understand the part about the owner being responsible, what about the associations responsibility a of times the hoa is not holding up their end. the community is not at a current upkeep and sooooooooooooooooooooo many other things are going on. i am not saying this is an excuse to not pay but these association need to step up to the plate.

cntctum, 
 
 
 
If you are displeased with your board, what are you doing about it? Are they violating the provisions of your gov. docs. and/or state law? I'm not saying this is you, but many assn members like to complain but are not willing to do anything about the problem including seeking a position on the board.  
 
BTW, there is never an excuse to not pay! Actually it's like cutting your nose off to spite your face. Bottom line: if your board is violating their fiduciary duty to the assn you should get a group of members together to confront them and demand they change their ways. Just sitting back and complaining won't change anything. Frankly, I've always said those type members get exactly what they deserve.

I say there is an excuse not to pay if the assessments are fraudulent and amendments have been passed without the proper vote of the members. So if there is a court case and a trial maybe the real scammers will be rooted out. I say it is unjust to be forced to pay HOA fees that violate the CCRs which are your contract....and you have a right to challenge it without just willynilly paying whatever they tell you to pay, or they will foreclose on you. It is time to stand up and defend your rights.

Fran, 
 
 
 
Your are right and your are wrong! I say it's OK to let the BOD know a mistake has bee made and provide proof of it. However, if they disagree and continue to say your are delinquent it's much better to pay the amount they say you owe than to continue to have late fees pile up and face the potential of a lien or a foreclosure. It can all be ironed out in court. But to refuse to pay because you think that is your right will have dire consequences.

Larry: 
 
 
 
 
 
I really appreciate the aggressive tactics of your HOA! We have units that have not paid for over a year and the HOA president (who has all power, we are a very small building) refuses to invoice or lien. Instead, he has asked me not to make a fuss as a dues paying member since our bills are paid. I am now in the process of looking for an attorney to go after my HOA to do its job! I believe his lack of collection falls under fiduciary duties, I'll use some of your language the next time I see him in the hall!

I live in Florida, and the HOA has placed a lien on my unit for being 30 days late. I was served by attorney court recorded lien. Not being familiar with the process, I ignored the lien. I wrote letter to attorney asking what the payoff was. Now there have been more fees accrued. Foreclosure fees + costs. I made a payment of $700 covering lien cost/att fees/assoc fees.  
 
 
 
Took a road trip to county clerks office and found out the only action that's been filed is the lien, hence why I only sent att $700 & not $2000 (foreclosure fees/cost). 
 
 
 
My advice to anyone in this predicament is to be proactive. You get served seek as much knowledge as possible. Ask questions, find out how the system works. It amazes me that during this ecomomic downturn that this assoc wasted no time with this procedure.  
 
 
 
I am seeking legal advice on this, but to ALL BOD, this should be the last alternative.  
 

I work for an attorney who deals with HOA and Condo owners who are delinquent. I would like to say that in my experience most people do ignore our letters (and yes we post the notice of intent to creat a lien) on their door, which is also sent certified mail and regular mail. Approximately 65% of owners only contact us when they have had their bank and wages garnished after approximately 2 to 3 years of attempting to collect the debt with no response from the homeowners. They then call to say they cannot afford the mortgage or pay their bills yet when we have to get some of them in court for an oral exam and they bring in their bank statements, tax returns etc, alot have restaurant bills, large donations to various organizations and even vacations. Personally when I was in a similar situation with medical bills for my Husband I cut my cable bill, got rid of our cell phones and did not eat out at fancy restaurants etc until I had paid the bills. Some people think they can lead their normal life when their situation changes, loss of employment etc but it cannot. As a footnote: we do attempt to work with the debtors and even offer large waivers as incentives to pay in full or not breach payment agreements.