Our firm is starting to hear from some of our clients that their homeowners are struggling to make their HOA assessment payments each month because of the impact that COVID-19 has had on many families and their jobs in America. We want to make sure our clients are keeping an eye on the association’s financial status each month, to make sure the association itself does not get into a financial hardship.
We encourage your Board to send reminders to homeowners regarding the importance of the dues in the community. Further, the Board should encourage homeowners to sign up for auto-pay if possible. While it is okay for the Board to work with individual homeowners who are struggling to pay assessments timely, we do not recommend that the Board waive a homeowners obligation to pay assessments. Payment plans may be a great way to work out an agreement with individual homeowners who are struggling during this time. Keep in mind, there may be some homeowners that the Board is unable to get in contact with or unable to work out an agreement. Also keep in mind, in general, the larger a debt becomes and the more time that goes on, the harder the debt is to collect.
For individual files that the Board thinks need to be turned over to an attorney or collection agency for collection efforts, the Board needs to keep in mind a new law that went into effect January 1, 2020 from the 2019 legislative session. The new law requires the Association to provide written notice to the owner at least 30 days before authorizing an attorney or collection agency to begin collection action. Further, the notice must be sent certified mail, return receipt requested, and must have the following statement in boldfaced type or all capital letters:
Your account is delinquent. If you do not bring your account current or make arrangements that are approved by the association to bring your account current within thirty days after the date of this notice, your account will be turned over for further collection proceedings. Such collection proceedings could include bringing a foreclosure action against your property.
Once the 30 day time period has passed, the Board may turn the lot/unit file over to an attorney or collection agency for collection action. We encourage the Board to keep this process in mind because it adds an additional 30 days to debt collection that was not required prior to January 1, 2020. Further, our firm will request confirmation that the action above was taken by the Association.
Please contact our firm if you have any questions about collecting delinquent assessments or any other COVID-19 issues. Please also check out our Firm’s cheat sheet on this topic, Our Firm’s Secrets to Effective Collection of Delinquent Assessments & Available Legal Remedies. Additionally, Beth Mulcahy, Esq. recently addressed this specific topic in this video.