Assessments are the lifeblood of any condominium or homeowners association. To run properly, community associations must maintain strong financials. Associations must ensure that unit owners pay their assessments on time and in full and that any delinquencies that arise are handled by a community association collection lawyer who can employ the most effective strategies for getting optimal results. These are the top 5 reasons community associations need an attorney that specializes in collections for condominium and homeowner associations:
- Ensuring association compliance: Statutes, case law, and the association’s governing documents provide community associations with the authority to collect specific fees. A community association collection lawyer can review each account to ensure compliance. This is critical before pursuing – and collecting from – delinquent unit owners.
- Providing an in-depth analysis of an association’s delinquency report: Carrying high delinquency balances is not attractive to individuals looking to purchase in a community, nor is it appealing to mortgage companies that lend to purchasers in a community. It is essential to look at older accounts that may have been sitting on the association’s books for years to determine if the accounts are collectible. Often, older delinquencies can consist of former unit owners who have died or who have filed for bankruptcy. Sometimes, the balances of former owners consist almost entirely of late fees and interest or are too minimal to make pursuing a viable option. In certain circumstances, the association board of trustees should consider writing off old delinquencies as bad debt. Consulting a community association collection lawyer about the potential to collect on each account allows boards of trustees to make informed decisions about their delinquency report.
- Choosing the right collection strategy based on the circumstances of each case: Not every case warrants the same strategy. At the start, a community association collection lawyer works diligently to determine the most effective collection options to recover money for community associations, whether it be bank levies, wage executions, rent levies, rent receiverships, or foreclosures. Choosing the right path is imperative to avoid incurring legal expenses for minimal or no results.
- Protecting the rights of community associations when a debtor files bankruptcy: Community associations can be secured creditors if they diligently maintain liens to secure the arrears owed to them. In-depth knowledge of association claims as a creditor in Chapter 7 and Chapter 13 bankruptcy filings is critical to ensuring the best possible outcomes for associations in bankruptcy cases.
- Keeping community association boards of trustees in the know: A community association board of trustees are tasked with making decisions regarding delinquent accounts. It is essential to provide workshops for boards to explain the collections process, timeframes, and what to expect in each collection scenario to allow boards to make informed and effective decisions.
Overall, it is important that you are well prepared to run your association. You cannot do so without the appropriate professional who is on your side to guide you in your decision-making process each step of the way.
Melissa A. Volet is a Shareholder and member of Stark & Stark’s Community Associations Group. She concentrates her practice on collections for associations and works with associations to maximize their recovery on delinquent unit owner accounts, focusing on money judgment actions, foreclosure actions and representation of association’s creditor rights in bankruptcy actions. She can be reached at 609.791.7004 or mvolet@stark-stark.com.
