I would say its high. I have three residents who have been through the warning letter stage and the fines and we are now ready to put liens on the property. A resident who owed roughly about $500 has $489 in legal fees and $170 in fines attached and now they tell me that a lien will cost the association another $750. Hopefully we will get all that money back someday. The legal fees can pile up very fast.
Doesn;t it depend on the size of the condominium or HOA? Also on the number of of people in the condo who are upset with the Directors and are complaining to the State or other owners about the way the place is managed? Also on the Directors who run to the attys every time a complaint is made instead of following the rules as the should be followed. High legal fees mean an incompetent board. Board members should read the docs and rules and the state statutes and follow them.
Not certain of your situation but it sounds like your association is retaining an attorney? We have one or two delinquent owners but try and work things out before filing a lien. Our yearly legal costs are zero, if a lien is filed, the owner is responsible for all legal costs.
You can eliminate all legal fees associated with delinquent assessment collection if/when you assign the collection effort to a firm that specializes in that area. The association receives funding up front, eliminates legal fees, and will usually receive 100% of its outstanding assessment.www.firstsourcefunbd.com
The things to do in an effort to control legal costs are indeed varied. Search out and invite members of your association that possess knowledge on legal, and administrative experience. The better the Board the better the operation. Look to leadership over longevity. Sitting in position for 20+ years becomes a looped popularity contest. Draw on your Manager that person has the professional credentials to save the Board money.
BC MARTELLO's is the best .
I bought a car for $25,000. Is that high?
First, what is your attorney doing? Break down the costs. For example, x amount is legal opinions (are we within our rights/boundaries as a board), y is review of contracts and other legal agreements and z is collection. For z, it is for (h) amount of homes/condos. So, let's say collection is $10,000 of the $15,000. Let's say the $10K is for twenty units. That is $500 a unit.
What is your state law regarding collection? Some states state you can charge those back to the homeowner.
What is your process for collection? What is the likelihood of collection? Are you just going through the motions or do you actually know? Are you even on the board or did you just see the yearly expenses and go "That's too much!" without even having any background information?
Prices vary from state to state, depending on the rates for the work of the attorney, filing fees and other court costs. For example, in Michigan most attorneys charge for the lien and the discharge all up front. The typical cost is $400-500 for a lien.
How many are past the lien stage?
Collections are tough right now. With homes and units underwater, liens and foreclosures are not the leverage they used to be, and most associations have limited options.
The board should be doing what is most REASONABLE. I have seen boards pursue collection because they see non-payment as a matter of fairness, not a business matter. It should be business review - We did not collect (a), it costs (c) to pursue collection, (l) is the likelihood of collection. Sometimes it comes down to which will be the lowest loss.
If you are on the board, determine your goals in collection. Then as a board, have a frank and open discussion on tactics and options for collection with your attorney. Some associations are only filing liens and then waiting. Foreclosures are done on a case by case basis. Attorneys are also getting creative and going after other property and assets as well as getting judgments and garnishing wages.
The attorney may only be doing as directed because he or she has not been able to present or discuss with you other options.
You think that is high legal fees? Try a maniac on the board making false accusations, not announcing meetings, and not producing financial records upon request. Then running up the cono legal fees to over $50,000.00 by best estimate. We only have 47 units. And for all their efforts have recovered no money. THAT IS THE DEFINITION OF NUTS JUST LIKE ALL THE BRAIN SUGEONS WHO KEEP VOTING FOR THIS NUT
John Mooshie has a very good idea. Learn to use small claims court. It is very easy and eliminates lawyers. Find an attorney or collection agency that specializes in Condominium collection procedures. It is impossible to say whether legal fees of $15,000 are too high without knowing the background.
Paul, re the maniac on the board who is running up legal fees -- pass a resolution limiting who can contact the lawyer, usually the president.
If the maniac is the president, the board elects the president and so you should be able to vote him/her out of office. (It sounds like the members voted for him to be on the board so it would be almost impossible to get him off the board.)
Runaway spenders should be recalled. Get them out of there! Don't worry about hurting someone's feelings or stepping on toes. The board has a financial responsibility to all owners and should ask for his/her resignation or vote them off.
Liens do not have to filed by an attorney, at least not in Arkansas. My POA has filed several - it's basically a fill in the blank process. The only fees involved are for recording the lien at the courthouse, and then releasing it - probably less than $50 for both. When we have problems we can't handle by ourselves, we go to an owner who is an attorney. We barter his legal expertise for his POA dues - less than $2,000 per year. A past Secretary was a paralegal and a current Board member was a journalist so they knew their way around the courthouse. As someone above suggested, poll your owners. Help may be in your own Association.
This is an exellent tool for others to learn what other do to reduce the costs of high legal fees.
I lost my job 3 years ago and I'm still unemployed. I have fallen behind in my condo fees. Unbeknownst to me, the condo attorney contacted my bank who holds the mortgage and the bank paid these back fees. I am in the middle of trying to get a loan modification with my bank. Will the bank start foreclosure proceedings. Also, after about living here 8 years, the management co. informed my section of units that our fees were incorrect and we all had adjustments. The percentage of ownership was incorrect when recorded in the Master Deed. It was a matter of transposition of unit #'s. The owners knew this and paid the fee that should have applied to them. When the new management company came in, they put the fees to where they said they should be. We fought this and the master deed is to be amended; we, the owners paying a much higher fee for a much smaller unit feel they should stop charging the higher fee since they know this was an error. So, that's my dillema. I am really worried about foreclosure. Please help!
After brainstorming on forums with Board Members Across the Country, one very effective remedy stood out for reducing assessment delinquency rates.
As all Board Members know by now, collecting assessments has been a very trying issue given current events with the job market, foreclosures, under water properties, etc. Home owner's within community associations just don't fear liens like they used to.
As a result, communities across the country are bleeding from the cost associated with collecting assessments. First comes the labor involved my member's to exercise internal policies and then the legal costs associated with any efforts after the internal policies fail to produce results, i.e., attorney costs for filing liens, obtaining judgements, collection, etc. Next thing you know, years have gone by and still no effective results.
So we posted the issues to forums online and opened up the discussion of how to reduce delinquency rates so that FHA will back mortgages within those communities. We found only one solid solution: Sell and assign the liens and judgements to get them off the Associations Books.
Once Sold and Assigned, the HOA has no further accountability or liability. This method presents several advantages . FHA Backed Loans will bring buyers into the community and potentially raise market values.
Communities will recapture some of their costs for otherwise non performing assets.
Selling and Assigning Liens and Judgements is relatively easy and inexpensive. It is only appropriate in certain situations but does offer an immediate result. Communities are encouraged to seek their legal counsel on the pros and cons of doing so since the laws vary from State to State. Also note that both current residence with Liens and previous owner's with existing liens and judgement can potentially be auctioned, sold and assigned for an additional source of revenue.
Richard Atzrott is a Managing Member of Smart Options 101 LLC, Owner and Operator of Meanliens.com Meanliens.com
is an Online Auction Portal for Liens and Judgements. 3012 Oak Forest Drive | Parkville, MD 21234 | 443-219-3175.