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Tags: SFPMA Members News
HOA debt collection and community association management are two very highly-regulated industries. Between sweeping federal regulations like the FDCPA, state statutes dictating operational and communication requirements, local city or county rental ordinances, and of course, individual community governing documents, there is a lot of governance in the HOA and condo association world.
This abundance of legislation can make it hard for board members to know what steps they’re allowed to take (and when!) regarding HOA debt collection.
When an owner goes delinquent on their HOA dues, the community usually has a security interest and the ability to foreclose and take limited title to a property. Before they exercise the security interest, and even before they can send a unit into collections, there are specific steps that must be taken. These steps are called “Condition Precedent.”
A condition precedent is defined as “a condition or an event that must occur before a right, claim, duty, or interest arises.” In plain English, certain tasks must be completed before an anticipated action can occur (like a collection effort). You can’t take a vacation until you’ve saved up enough money, right? Same concept.
If your management team does not get the condition precedent right, then your HOA or condo association cannot send a file to collections. Period, end of story. So these are very important steps of the collections process.
Condition precedent can vary widely depending on what part of the country you are in and what other legal restrictions your community is under. This will mostly depend on where your HOA or condo association is located, but it can also be impacted by what your own governing documents state.
Some states require a host of steps that need to be taken before a community association can move a file to a collection agency. Some of these steps include but are not limited to:
While this list covers many common condition precedent requirements, every state will vary. If your association misses a step, it could very well mean that you will lose any progress you’ve made and be bumped back to step one. Community association management firms should understand what their communities are expected to do legally before sending a unit into collections.
Axela Technologies has a team of experts who understand all of the condition precedent steps needed and can help educate on this exact matter. Whether you’re a management company looking to help your associations stay on track, or a board of directors seeking out HOA debt collection assistance, Axela can help.
When you are ready to recover your money, avoid the hassle and get a professional to help. Click here for a free, no-risk consultation with an Axela collections specialist.
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Tags: Painting Service Articles
SOME OTHER NEW LAWS CONDOS MUST FOLLOW – PART TWO
By Eric Glazer, Esq.
DISTRIBUTION OF THE INSPECTION REPORTS
Upon completion of a phase one or phase two milestone inspection and receipt of the inspector-prepared summary of the inspection report from the architect or engineer who performed the inspection, the association must distribute a copy of the inspector-prepared summary of the inspection report to each unit owner, regardless of the findings or recommendations in the report, by United States mail or personal delivery and by electronic transmission to unit owners who previously consented to receive notice by electronic transmission; must post a copy of the inspector-prepared summary in a conspicuous place on the condominium property; and must publish the full report and inspector-prepared summary on the association’s website, if the association is required to have a website.
THE DEVELOPER’S TURNOVER REPORT
Notwithstanding when the certificate of occupancy was issued or the height of the building, the developer must provide a milestone inspection report in compliance with s. 553.899 included in the official records, under seal of an architect or engineer authorized to practice in this state, and attesting to required maintenance, condition, useful life, and replacement costs of the following applicable condominium property common elements comprising a turnover inspection report:
POWERS OF THE DIVISION
So let’s say the developer is ignoring all of these new safety laws. Does the DBPR have any power to do anything about it?
(1) The division may enforce and ensure compliance with this chapter and rules relating to the development, construction, sale, lease, ownership, operation, and management of residential condominium units and complaints related to the procedural completion of milestone inspections under s. 553.899.
However, Once The Developer Has Turned Over…
(2) However, after turnover has occurred, the division has jurisdiction to investigate complaints related only to financial issues, elections, and the maintenance of and unit owner access to association records under s. 718.111(12), and the procedural completion of structural integrity reserve studies under s. 718.112(2)(g).
So………..if your Board ignores these new safety laws and you want to do something about it…..it’s off to court.
CAMS…please share with your Boards and interested homeowners.
Tags: Education - HOA's
We all know by now the myriad of new safety laws condos that are 3 stories or more are required to follow. They include mandatory fire sprinklers or an engineered life safety system (for buildings 75 feet or higher only), a Phase One Milestone Inspection after 30 years and every ten years thereafter (25 years if the building is on the coast), a likely Phase Two Inspection which will result in required repairs to the structure and of course structural integrity reserve studies performed by an architect or engineer and the mandatory full funding of reserve accounts.
There’s actually more to know.
OFFICIAL RECORDS TO INCLUDE AND BE POSTED ON THE ASSOCIATION’S WEBSITE:
A copy of the inspection reports for the milestone inspections and the structural integrity reserve studies and any other inspection report relating to a structural or life safety inspection of the condominium property. Such record must be maintained by the association for 15 years after receipt of the report.
NO LONGER IS THERE THE ABILITY
TO WAIVE RESERVES OR USE THEM FOR OTHER PURPOSES
It was always ridiculously easy to waive the funding of the reserve account. All it took was a lousy majority of a quorum. Those days are now over and reserve accounts must be fully funded, like it or not.
The same rule finally applies to developers. Before turnover of control of an association by a developer to unit owners other than a developer under 718.301, the developer-controlled association developer may not vote the voting interests allocated to its units to waive the reserves or reduce the funding of the reserves.
You can no longer vote to use reserves set aside for one category to be used to repair another category. Effective December 31, 2024, members of a unit-owner controlled association may not vote to use reserve funds, or any interest accruing thereon, that are reserved for items listed in paragraph (g) for any other purpose other than their intended purpose.
(g) Structural integrity reserve study.
BREACH OF FIDUCIARY DUTY – THIS IS SCARY
(h) Mandatory milestone inspections.—If an association is required to have a milestone inspection performed pursuant to s. 553.899, the association must arrange for the milestone inspection to be performed and is responsible for ensuring compliance with the requirements of s. 553.899. The association is responsible for all costs associated with the inspection. If the officers or directors of an association willfully and knowingly fail to have a milestone inspection performed pursuant to s. 553.899, such failure is a breach of the officers’ and directors’ fiduciary relationship to the unit owners under s. 718.111(1)(a). Again, If you’re an officer or director, this new law should scare you to death. If you fail to do the milestone inspection, you have automatically breached your fiduciary duty. This could potentially result in individual liability against a director should the failure to do the reserve study result in collapse or injury.
Tags: Condo and HOA
In good times or bad times, community associations (Condos and HOAs) will experience some level of delinquencies that affect the entire association. As a not for profit business your association depends on timely payments every pay period to maintain services to members of the association. Failure to effectively act on a delinquent account does a disservice to the community and to the delinquent member as well. By allowing a member to sink deeper and deeper in debt, the association only makes it more difficult for them to remedy their problem. Engaging a Legal Process (sending the file to your community association attorney) the association may just be incurring additional expenses that eventually will be paid for by the good-paying owners.
Often HOA boards of directors are reluctant to migrate delinquencies to collection agencies from their community association attorney. This article looks at the key benefits and concerns regarding collection agencies for community associations, examines the current state of collections, and helps associations understand why a specialized collection agency for community associations offers tremendous opportunity to collect their money at very no cost and no risk.
Almost every community association looks towards their community association attorney to manage their delinquencies. Yet community association attorneys are not prepared to do the work necessary to effectuate collections (outbound calls, credit reporting, skip tracing, dedicated inbound call center), and the costs are usually beyond what they recover. Collection agencies have traditionally been performance-based and will collect their fees and costs only upon a successful collection event. Collection agencies are concerned with only one aspect of business and that is the successful and cost-effective recovery of maintenance fees and other charges that may appear on the ledger (fines & violations, special assessments).
The most important feature of an enterprise-level collections solution is its ability to communicate with delinquent owners. Both inbound calls and outbound calls must be managed by highly trained and accredited specialists. When seeking out a collections company for your HOA ask if there is a dedicated portal for delinquent owners to resolve their issues. Boards of Directors and their management companies need to have access to clear and legible reporting. Payment applications must be handled according to governing documents and state statutes. Strict compliance with Federal and State consumer rules and regulations is imperative.
Community Association law firms require payment regardless of the outcome of the file. These costs often are beyond the amounts recovered. Collection Agencies are merit-based and are only paid upon a successful collection effort. In the specialized field of collections for community associations boards of directors should not, and in some cases, cannot allow any portion of their maintenance fees to be allocated as boards must be faithful to their association’s budget. Fees and costs of collections should be charged and passed through to delinquent owners, and in the case of an unsuccessful collection effort these fees should not become the burden of the association (including costs for filing a lien)
It’s easy to see why these key features are the motivators for moving your collections to a specialized collections company and away from a community association attorney. Yet, many boards of directors are reluctant to change what they have traditionally done in the past, and of course, they will be advised by their own counsel not to remove a collection file from their firms.
Any vendor who performs services for a community association must have the proper insurance to protect the association from liability. Violations of consumer protection laws should be a great concern.
A community association must perform their due diligence and be sure that their collection agency is not only bonded but properly insured. Associations should also be concerned that the customer service representatives of the collection agency are professionally trained and have designations from collection industry trade organizations such as ACA (The Association of Credit and Collection Professionals).
Of significant concern to community associations should be a collection agency’s adherence to governing documents and state statutes that relate to condos and HOAs. Payment application, timelines, statutory compliance to the lien process, and notification are of paramount concern to community associations, especially regarding collections. Zero defect execution of the collections process must be the standard practice. Collection agencies need to:
With increased scrutiny of the collection industry, it is more important than ever for community associations to engage the right company with the most sophisticated technology that can support their missions. They should:
It is also imperative that community associations increase efficiency, transparency, and reporting to members of the community. Collection Agencies that specialize in working with community associations are the best way to go. The right collection agency just makes sense for communities – Do not allow delinquencies to erode your community.
Axela Technologies is a licensed collection agency exclusively serving community associations in the United States. Axela Technologies realizes that in the field of collections, community associations have been an under-served industry. By offering their core product Easy Collect ™ to community associations Axela Technologies has recovered millions of dollars that community associations might have otherwise written off. Give Axela a call today and get a free no-obligation collections analysis today to see if a specialized collections company is right for your association.
Tags: Collections
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