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Condo Boards Must Keep Collecting Condo Fees


Question:

Homeowner Associations are going through some unusually tough times. This is partly because of the economic times and partly because of rumors and misinformation that homeowners association leaders are choosing to buy into.

There is no doubt that the economy is in bad shape. With condo foreclosures in great abundance, condo associations  and HOAs are having collection issues with their condo fees. For every condo that heads toward foreclosure, there are apt to be about four months of unpaid condo fees due to the homeowners association. After several of these, a lack of cash flow can adversely affect the homeowners association's financial condition.

It is true that even though owners may be about to lose their homes due to a variable rate loan gone crazy, they still owe their HOA fee, and that bill should be paid. Sadly, most who are about to lose their condo don't have much interest in maintaining the homeowners association or its community.

The board of directors of a condo association with delinquent condo owners has a duty to place a lien on those units owned by anyone who fails to pay his or her maintenance fee on time. This is done in accordance with a delinquency policy established in the condo association's governing documents.

Unfortunately, this is not inexpensive. The cost of collection of condo fees is billed to the delinquent owner, but actually making that collection can be difficult. In the end, uncollected delinquencies are made up by increased condo fees to the rest of the owners.

Not unlike a retail store budgeting for losses due to theft, homeowner associations need to condo association budget for bad debt. This is a reality in today's society.

Fault finding is really fruitless. In an economy like the one we all are going through, a number of factors play a part, including owners losing their jobs and loan rates adjusting to a payment beyond affordability.

Regardless of the reason for nonpayment of condo association fees, the condo board of directors has an obligation to follow the collection procedures and maintain financial stability. Even good neighbors may be in financial trouble, and the board needs to treat everyone the same.

Do not blame condo board members for doing their job. They are raising association fees and writing collection letters to delinquent owners as well as continuing to spend money maintaining the community because of a fiduciary duty to do so.

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