Become our Member : JOIN SFPMA TODAY   LogIn / Register: LOGIN/REGISTER

SFPMA Industry Articles | news, legal updates, events & education! 

Find Blog Articles for Florida’s Condo, HOA and the Management Industry. 

Community Association Collections 101: What Is a Condition Precedent? by Axela Tech.

Community Association Collections 101: What Is a Condition Precedent? by Axela Tech.

Community Association Collections 101: What Is a Condition Precedent?

Mitch Drimmer

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.

 

HOA Collections: Condition Precedent and Process

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.

 

What Condition Precedent is Needed to Send a File to Collection? 

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:

  • The association must send a courtesy letter to a delinquent owner.
    • In some states (Colorado, for example), if the owner speaks any other language besides English, the community association is required to communicate in their language. This can be critical. It must be a good translation from English that would be acceptable in a court if necessary (so Google Translate is probably not good enough).
  • Sending a Notice of Delinquency to the delinquent owner via certified mail, return receipt requested.
    • The notice should advise the owner that they can enter into an 18-month payment plan.
    • This notice must also advise the owner regarding:
      • Unpaid assessments.
      • Unpaid fines for violations.
      • All other charges should be itemized in this notice.
      • And the association needs to advise the owner that a security interest exists, and the community exercises its right to foreclosure.
  • The association must have a Uniform Collection Policy that will review the steps that the association may take to collect the past due assessments.
  • The board must take a vote (in a closed session) before they send a unit into collections.

 

Get Help Navigating HOA Collection Condition Precedent

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.

 

Tags: ,
Why A Specialized Collections Company Makes Sense for Your Community Association by Axela

Why A Specialized Collections Company Makes Sense for Your Community Association by Axela

  • Posted: Jul 20, 2022
  • By:
  • Comments: Comments Off on Why A Specialized Collections Company Makes Sense for Your Community Association by Axela

Is a Specialized Collections Company Right for Your Association?

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.

The Promise of a Specialized Collections Company

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).

Operational Excellence and Reporting

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.

Cost Savings

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)

Concerns Regarding Collection Agencies

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.

FDCPA, TCPA, & FCRA Compliance

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.

  • Know and be in compliant with Federal and State Regulations.
  • Report delinquencies to credit bureaus in compliance with the FCRA.
  • Ensure all telephone calls are following TCPA regulations.

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).

Statutes & Governing Documents (CC&Rs)

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:

  • Perform flawless underwriting of each ledger.
  • Verify property ownership.
  • Impeccably review governing documents and by-laws and understand the state statutes where they are doing collections.

Conclusion

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:

  • Compare and document standards, guarantees, and performance levels to ensure that prospective collection agencies are truly best-in-class solution providers.
  • Ask for collection agency references and connect with these references to get a true feel for the providers’ service, product and

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.

About Axela Technologies

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:
How To Settle a Debt with an HOA Collection Agency

How To Settle a Debt with an HOA Collection Agency

  • Posted: Jul 14, 2022
  • By:
  • Comments: Comments Off on How To Settle a Debt with an HOA Collection Agency

How To Settle a Debt with an HOA Collection Agency

Mitch Drimmer

If you’re reading this, it’s likely because your condominium or homeowners association has decided to take action regarding your unpaid assessments. You’ve received the letter from an HOA collection agency and now you have some serious choices to make.

You’re facing a very difficult situation, but there is at least a thin silver lining–your association’s board of directors has decided not to send your file to the association’s attorney. Many associations make the drastic decision to jump straight to the Big Red Button when it comes time to take action about delinquency: engaging the community’s attorney to foreclose. When this happens, even if you fight it in the end, it will cost you a lot of money or your residence. It’s not a nice process but that is how it is done in most cases of owners defaulting on their obligations to their HOA/Condo. Eventually, you will pay what you owe and that will also include attorney fees and costs.

Instead, you have an opportunity now to avoid all that potential sunk money and aggravation by working with your HOA or Condo and their collections partner.

Working with an HOA Collection Agency

If your HOA or Condo association has engaged an ethical collection agency (like us), then you are in luck. It is almost as if the HOA has given you a second chance at redemption at a reasonable cost! Though it may seem counterintuitive to believe that a collection agency would be good news, it is. You’re not being forced to settle with an attorney and saddled with outrageous attorney’s fees. Instead, you should be able to make your community whole on a reasonable payment plan without the added costs and fees of engaging legal counsel.

An HOA collection agency such as Axela Technologies should understand that every delinquency has a story and families behind it–that the people who are delinquent do not all deserve to be foreclosed upon. An HOA collection agency should not only reach out to talk to you but should work with you and your needs. Getting on the phone to review and seek out solutions is what they do. Payment plans are often very effective and serve to not only make the association whole but increase harmony among the owners.

Settling Your Debt with an HOA Collection Agency

  1. Take a deep breath. It’s hard to come to terms with the fact that you have been sent to collections. But at the end of the day, though your community is your home it is also a fully-functioning business, and they need to protect their financial security. Accept that you have an issue and know that it can and will be worked out.
  2. Follow the instructions. When you receive your initial demand letter (which is required by Federal law) do not ignore it. Even if you cannot pay off all of your owed debts at once, or even a fraction of those missed payments, refusing to answer will only cause the problem to fester and worsen.
  3. Take action and contact the HOA collection agency. Taking the time to initiate a response shows that you’re serious about getting back on the right foot. You can contact the HOA collection agency by logging into the agency’s provided user or payment portal. If the agency doesn’t have that level of technology, you’ll have to call in directly or email them depending on their instructions.
  4. Work with the HOA collection company and set up a payment plan that suits your financial situation. Of course, the best way to settle with your HOA is to pay in full to the HOA collection agency but if times are tough, get and stay on a payment plan.

If you are really squeezed for funds, it may be worthwhile to consider alternative funding options, such as a Home Equity Line of Credit. If this is an option you’re thinking about, though, keep in mind that you’ll need to work quickly, because if the HOA puts a lien on your property, then there will be an obstacle to getting this credit facility.

The Best Thing You Can Do

At the end of the day, the best advice is the same advice we would have given the moment you got your first warning letter: pay attention to the notices that your management company and board of directors send you. This is one situation that cannot simply go away on its own, and should it escalate and the board sends you to an HOA collection agency, move fast. Get in contact with them and begin the process of getting yourself paid up and securing your residence.

However, if your HOA or condo association is still using an attorney to recover delinquent assessments, or is using a generic or predatory collection agency, perhaps your board can take a more appropriate response and engage Axela Technologies. We specialize in HOA and condo association collections, and take an ethical, human-focused approach when handling delinquency and recovery. Call us today to get more information for your community.

 

Tags: ,
Collection Laws in Every State, How The State and Federal Government Regulates Collections

Collection Laws in Every State, How The State and Federal Government Regulates Collections

  • Posted: May 16, 2022
  • By:
  • Comments: Comments Off on Collection Laws in Every State, How The State and Federal Government Regulates Collections

Collection Laws By State

While each state must follow the FDCPA, most have additional laws that regulate how debt collectors interact with consumers. Use the map below to learn how your state regulates these laws.

Don’t see your state? Axela Technologies is licensed to do collections in every state. We are taking care to build out a comprehensive guide outlining collection laws for each state. Keep watching this space!

 

The Fair Debt Collection Practices Act

Axela Technologies provides no cost and no risk collections for community associations using best practice collections strategies, advanced proprietary technology, and highly trained customer service representatives. We are licensed in across the United States and compliant with the Fair Debt Collections Practices Act (FDCPA).

The FDCPA is a federal law that prevents debt collectors from harassing or misleading consumers. It covers debt collection for mortgages, credit cards, personal loans, medical debt and other types of debt for personal use. Many states have their own fair debt collection laws as well. Some of these laws mirror the FDCPA. However, some offer more protection to consumers by, for example, covering creditors as well as collectors, specifying additional types of behavior that violate state law, or providing for additional types of damages. Below you can learn about the fair debt collection laws in various states.

HOA and Condo Delinquency Collection For Community Associations.

We are a specialized collections service which means a great deal in the community association industry. Understanding the nuances of how people fall behind in their maintenance fee payments and how to resolve their issues is a science and an art. At Axela Technologies we have what it takes to “move the needle” and recover 100% of what is owed to the association and the best part is that we are totally merit based. IF WE DON’T RECOVER YOUR MONEY WE DON’T GET PAID. A pretty simple concept but a bold promise at the same time.

Our proprietary software is second to none and we have the ability to keep the management and board of directors informed in real time 24/7. Our system never sleeps. The technology is fantastic and is only equaled by the people who will service your delinquent members and work with them to resolve their delinquency issues.

Tags: ,
Delinquencies are starting to pick up so, Comply with Changing State Association Collections Laws Using Axela Technologies

Delinquencies are starting to pick up so, Comply with Changing State Association Collections Laws Using Axela Technologies

  • Posted: Apr 26, 2022
  • By:
  • Comments: Comments Off on Delinquencies are starting to pick up so, Comply with Changing State Association Collections Laws Using Axela Technologies

Easily Comply with Changing State Association Collections Laws Using Axela Technologies

Are your community association’s collections in compliance with changing regulations?

Community association collections laws are changing. For many years, condominium associations and homeowners’ associations (HOAs) had a lot of freedom when it came to handling unpaid assessments. Community associations were able to pursue home and unit owners who fell behind in a variety of ways, because few state regulations interfered with the association’s right to collect overdue assessments. They were largely free to levy late fees, interest, collection costs, and legal fees against the delinquent home or condo owner. Condominium and HOA management firms, when acting as agents for their association clients, were similarly able to offer a collections process as part of their routine service offerings for their clients. This could include issuing warning letters, demand letters, and other collection notices, or even recording liens.

To say those days are over is an understatement. Although there are no federal regulations in place, many states now have condominium or HOA association collections laws that are designed to protect delinquent home and condo owners. While this type of consumer protection is really important, it’s created an unintentional side effect: community associations are more regulated and challenged than ever before when it comes to collecting the fees and assessments that are the lifeblood of their association.

Compliance 1

Community Association Collections Laws Vary by State

Make no mistake, these state laws must be obeyed and the consequences for violating them can be severe. Some states, like Florida, now require additional notices to be sent for certain types of collection activities, delaying the whole process. Other states, such as Texas, have such rigid requirements that many association management companies would rather pay a small fortune for an attorney than seek out cost-effective collections options, believing this is their best option to avoid risk.

Then you have states like Maryland where community association management firms are actually expected to acquire and maintain collection agency licenses in order to send out bills on behalf of their association clients. This is a huge burden being to place on management companies and creates yet another layer of risk. Maintaining a collection agency license requires extensive knowledge and practice of the current community association collection laws regarding the collection of delinquent fees from HOA and condominium unit owners–management companies should not be expected to shoulder that responsibility.

Compliance 2

Choose an Industry-Specific Collections Partner

Axela Technologies is licensed and insured in every state that we service.  Maintaining that knowledge of association collections law is a sacred duty that we take to heart so we can best serve the industry. We even offer indemnification to the associations and association management firms that retain our services to collect from their delinquent homeowners. This concept is so important, it merits serious consideration for any association management firm that wants to focus on delivering service excellence to its association clients without risking being sued for violating a state collection law.

Keeping up with the law changes in your state can be tedious and difficult. Let a specialized HOA and condo association collections agency handle that worry for you. Talk to one of our condominium and HOA delinquency collection experts to learn how best to collect those overdue fees and assessments while keeping your association management business and your association clients safe from the risk of handling collections without a license.

Compliance 3

 

Get your free collections analysis today and start working with one of our many HOA and condominium association collections experts.

Axela Technologies handles all collections on a merit-based system. We’ll help you make sure you aren’t putting your association at risk by violating federal or state consumer protection laws for your condominium or HOA.

 

Tags: , ,
Fishy Legal Tactics HOA Attorneys Have Used for Collections by Mitch Drimmer

Fishy Legal Tactics HOA Attorneys Have Used for Collections by Mitch Drimmer

  • Posted: Feb 05, 2022
  • By:
  • Comments: Comments Off on Fishy Legal Tactics HOA Attorneys Have Used for Collections by Mitch Drimmer

Fishy Legal Tactics HOA Attorneys Have Used for Collections

Mitch Drimmer  / Axela Tech

 

Thinking outside the box can be great, especially in the homeowners association and condo association industry. It’s what makes our signature collections process here at Axela so successful.

But out-of-the-box thinking can be used against you, too. Attorneys are always looking for new ways to make the most money, even HOA attorneys. Time and again we’ve seen the tricks they use claiming to try to collect for your association, but really they’re just lining their own pockets. So often, using an HOA attorney ends with the association losing the money owed to them, and having to pay on top of that to cover lengthy legal efforts that didn’t succeed anyway.

Every time we hear stories about the crazy lengths some lawyers will go to when collecting for HOAs or condos, we start to think maybe the box is there for a reason.

Unjust Enrichment Someone Expense Someone Else

Unjust Enrichment

A while back we talked about a community in a sticky collections situation. One of their unit owners had passed away, leaving a mortgage-free title to an heir. But, it came with a $13,000 tax certificate (which had been sold to an investor) and $17,000 owed to the association, as well as a tax-deed sale that had already been set. The perfect storm for the association to lose out on a hefty chunk of change. Now Axela was able to draft a clever plan to avoid that and had to act quickly to make it work, but if we hadn’t been called in, here’s what would have happened:

The HOA’s attorney wanted to let the unit go to the tax-deed sale and then file a suit for something called “unjust enrichment.” This is a claim basically stating that someone (in this instance, the investor who’d purchased the tax certificate) was paid at the expense of someone else (the association).

This is a risky play for a lot of reasons: first, if the tax sale goes through, the money owed to the association is ‘wiped out,’ meaning there is no chance of recovering money from the sale or from the owner after the fact. Additionally, if the judge found that the investor was not unjustly enriched (which is the likely outcome) their tax lien would have been rightly prioritized over association fees.

So the idea of unjust enrichment was a wild reach that was almost certainly going to be unsuccessful in recovering for the association. But it would have been a definite way to tack on a ton of hours in legal fees for the attorney, wouldn’t it?

Fishy Lawsuits Questionable HOA Attorneys

Sneaking In New Rules

Fishy lawsuits aren’t the only questionable trick attorneys have up their sleeves. One client we worked with had an attorney attempt to completely ignore state statutes by advising the Board to modify the community’s governing documents to contradict state laws. This was complicated and unethical for several reasons, like the fact that governing documents don’t overrule state statutes (something an HOA attorney would be WELL aware of!) so the attorney’s time and counsel which they charged the association for were totally unnecessary.

To add insult to injury, these changes were made to try to force the bank to take responsibility for debt owed to the association, creating a lengthy legal battle as part of this ridiculous plan. Again, we’re seeing a trend of attorneys being paid but the association not recovering their lost income – in fact, the community often winds up owing the attorney more for their efforts and having to write off the bad debt from the delinquent assessments. Talk about throwing good money after bad!

Attorneys Being paid associations not recovering

Just Because it’s Legal Doesn’t Make it Ethical

Clearly, all HOA attorneys are not the same, and we hope that your community association’s attorney is an upstanding and ethical partner for your community. You need your attorney to be available to advise you on decisions the Board makes to help prevent future lawsuits and to deal with any that do come.

But your attorney is just one of the tools in your community association’s toolbox. Just as you wouldn’t use your HOA attorney (and pay their high fees) to perform management tasks, you also shouldn’t be hiring your attorney to perform collections. The attorney’s only recourse is to take the issue to the courts. That means pursuing foreclosure, or, if that’s not likely to be successful, trying some legal scheme like these that will get the attorney paid for their time, but is unlikely to end with money in the association’s pocket.

The Attorney's Recourse To The Courts

Treating People Like People

Thinking outside the box can be great, but the more we hear about the crazy legal hoops attorneys find to jump through that only seem to take advantage of the association, the more we think that they need the box.

There’s at least one ethical, merit-based way that has a 95% success rate when it comes to collecting debts owed to associations: Axela. Our proprietary technology and process empowers defaulted homeowners to set up payment plans they can actually pay off, rather than harassing them for lump sums of money they’ll never be able to repay, or putting them out of their home in a foreclosure.

Tags: ,
Florida Statute Could Strike Down Delayed Collections For HOAs Post-Foreclosure by Axela

Florida Statute Could Strike Down Delayed Collections For HOAs Post-Foreclosure by Axela

  • Posted: Feb 03, 2022
  • By:
  • Comments: Comments Off on Florida Statute Could Strike Down Delayed Collections For HOAs Post-Foreclosure by Axela

We know that this headline reads like a Florida-specific issue, but Florida is often used as a guideline for other state laws and courts. For this reason, we think it’s important for homeowners and condo associations in other states to take note.

In Accardi v. Regions Bank, Florida’s 4th District Court of Appeals reversed a lower court ruling that awarded the bank a deficiency judgment and remanded the circuit court to enter an amended final judgment to include attorney’s fees and taxable costs only. The bank was not able to recover its deficiency judgment.

This happened because of a Florida Statute that states “Actions other than the recovery of real property shall be commenced as follows … within one year” (of a certificate of title being issued or acceptance of a deed in lieu of foreclosure, that is):

“An action to enforce a claim of a deficiency related to a note secured by a mortgage against a residential property that is a one-family to four-family dwelling unit. The limitations period shall commence on the day after the certificate is issued by the clerk of court or the day after the mortgagee accepts a deed in lieu of foreclosure.”

That’s a lot of legal jargon that most simply translates to say that there is a one-year statute of limitations period for which a claim for a deficiency may be acted upon (not to be confused with the timeframe for enforcing a deficiency judgment that has already been entered) in order to avoid the deficiency claim from becoming time-barred.

This Accardi v. Regions Bank ruling got us all thinking. Clearly, it reflects a problem for banks and lenders who have had to foreclose and were left with a sale that did not satisfy the judgment amount at foreclosure, but that isn’t really the takeaway here. The takeaway is that, in theory, this same statute could potentially be used to prevent delayed collections for HOAs and condo associations when attempting to recover assessments post-foreclosure.

Is your community association trying to recover outstanding debt post-foreclosure? You should be.

If the association was the foreclosing party, and they recovered less than the amount owed as a result of the sale of the property, then that would give rise to pursuing a claim for a deficiency. So it would be very worthwhile to enforce a claim for a deficiency within a year of the certificate of title being issued.

Again, this statute of limitations is specific to Florida, so if your own state already has statutes that have different time restrictions, you need to follow those to the letter of the law. But doing this seemingly small task in the right time frame could be the difference between getting your deserved monies owed or leaving it all on the table due to a dickered-out semantic technicality.

Similarly, if an association has debt that is uncollectable from a subsequent owner due to superior lien foreclosure or tax sale, the association should act quickly to enforce its collection rights on this debt. While the fact pattern under this scenario is different from pursuing a deficiency claim created by virtue of the association’s own foreclosure sale, it would be wise to take action to collect on this debt sooner rather than later, to avoid any potential argument that would suggest it is a deficiency and that it is time-barred.

Collections delayed are collections denied.

No HOA or Condo association should stop trying to collect the money it is owed to them until said debt has been declared uncollectible by a collection professional, and that may not be your community association attorney. Don’t leave money on the table and don’t accept HOA and condo delinquency write-offs. Let a professional Condo and HOA collection company recover the money that is owed to your community association.

Axela Technologies, the nation’s leading collection company for community associations, does know the laws nationwide and we suggest that pursuing that debt at no cost and no risk is a good strategy. A great strategy, you must send the file to collections before it is too late. Perhaps a court will say that beyond one year is too late.
Don’t write off debt that could have been recovered. Call us for a free review and collection analysis. Not only can we collect from debtors who have been foreclosed on, but we can also collect from homeowners who are behind on their assessments, all at no cost to the association.

 

 Community Focused

  Collection Services for Condos, HOAs and their Service Providers

Find us on SFPMA Learn more about the services we provide.

 

Tags: , ,
Shifting the Emotional Burden of Condo and HOA Delinquency by Axela Tech.

Shifting the Emotional Burden of Condo and HOA Delinquency by Axela Tech.

  • Posted: Jan 25, 2022
  • By:
  • Comments: Comments Off on Shifting the Emotional Burden of Condo and HOA Delinquency by Axela Tech.

Shifting the Emotional Burden of Condo and HOA Delinquency

by Bob Gourley / Axela Technologies

As an HOA delinquency collections professional, I frequently handle collection issues involving home and unit owners who have fallen behind in the timely payment of their association. So I know all too well the very real emotional cost paid by both debtor and collector. Timely payment and collection of common fees and assessments is as basic a business transaction as there is. However, because real human beings are involved, the transaction is often wrought with human emotion. Many times, those emotions range from tragic to hostile. Using a specialized debt collection agency for your condo or HOA delinquency problems isn’t just practical, it could be a lifesaver!

 

Pay Close Attention to the Person Behind the Debt Curtain

Unfortunately, regardless of how a condominium or HOA is managed—professionally or by the association itself—HOA delinquency cannot go unchallenged. If common fees and assessments aren’t collected in a timely fashion, the association suffers. Monies that were budgeted for association expenses aren’t available and, in some extreme cases, the good-paying owners in the community could be forced to cover the delinquencies through increased dues or assessments. This is an unfair situation that can cause serious distress in your community.

Shifting the Emotional Burden of Condo and HOA Delinquency

 

That said, consider this: when a homeowner hasn’t paid their association dues for multiple months, there are typically underlying circumstances and turmoil. Money is tight for whatever reason and the homeowner has decided that the association can wait for their money. Studies have shown that people experiencing financial hardships are far more prone to physical and emotional illness. Approaching someone who is experiencing financial hardship is challenging and should be handled by someone trained in doing so, as the conversation will likely be unpleasant.

Shifting the Emotional Burden of Condo and HOA Delinquency

 

Preparing for a Difficult Conversation

Should a delinquent homeowner decide to call the association or management firm to discuss their delinquency and address how they will repay the association, it will almost certainly be a lengthy call. It typically starts pleasant enough but quickly devolves into a discussion of non-association business items and explanations (or excuses) of why the fees cannot be paid at this time. The debtor will often play to the empathy of the person receiving the call, expecting that their story will convince the call recipient of their goodness and their intent to pay eventually when things get better for them. But the association is a business, and no amount of empathy can erase the fact that the money they owe is very much needed to keep the community healthy and successful. Homeowners often fail to remember that they don’t just live in a house that they call home, they live in a collection of homes that rely on one another to thrive, and any dollars lost can cause real struggle.

Shifting the Emotional Burden of Condo & HOA Delinquency

Once they are reminded of that, the call tends to escalate into anger because the debtor isn’t getting the leniency they hoped for or want. If you have ever received a call like this, you know exactly what I am talking about. These calls often end with little to no positive outcome.

In fact, there is usually a negative outcome. The debtor is upset because the call didn’t go their way. They still owe the money and they are now convinced that the association doesn’t care about them. The call recipient is typically upset because they have spent a great deal of time hearing the sad tale of woe and then being subjected to the debtor’s anger when things didn’t go their way. I have heard tales of people listening to the debtor for 25 to 30 minutes and then needing just as long to recover from the sad and hurtful phone call before being able to get back on task. This is a great emotional expense, but it can also be a great financial expense for time lost to an unproductive activity.

 

Hand Off the Emotional Burden

Using a specialized and fully licensed condo and HOA delinquency collection service such as Axela Technologies makes perfect sense in this situation. The association or management firm simply places the delinquent home or condo owner into our collections system as needed. At no cost or risk to the association, Axela Technologies’ highly-trained debt collection professionals take that burden off the association or association management firm. Since working with delinquent owners is all we do, you can bet we are equipped to handle the emotional cost of delinquency to the owner as well as the association. Since our service is merit-based, there is no extra financial burden on the good-paying owners. We take a negative and turn it into a positive.

Get in touch with Axela Technologies and avoid the emotional cost of delinquency for your association and your association members. Axela Technologies handles all collections on a merit-based system. Visit our website at https://www.axela-tech.com today to get in touch with one of our collections experts.

 

Tags: , ,
Can my HOA Collect if the Homeowner Declares Bankruptcy? by Axela Tech.

Can my HOA Collect if the Homeowner Declares Bankruptcy? by Axela Tech.

  • Posted: Jan 14, 2022
  • By:
  • Comments: Comments Off on Can my HOA Collect if the Homeowner Declares Bankruptcy? by Axela Tech.

Can my HOA Collect if the Homeowner Declares Bankruptcy?

by Axela Tech. / Mitch Drimmer

Bankruptcy is one of the most perplexing issues community association managers must deal with. It is the most complicated issue involved in condo and HOA collections. So YES, a condo or HOA CAN collect if a homeowner declares bankruptcy. But you must know what you are doing and how to do it.

What Is Bankruptcy?

Bankruptcy is generally taken to mean that someone is out of money. But the actual meaning, and the legal proceeding of bankruptcy, are a little more complicated. Declaring bankruptcy isn’t as simple as someone saying, “Sorry, I have no more money left,” it’s a legally determined state of being unable to pay off debts owed.

The goal of filing for and declaring bankruptcy is to create a more positive economic situation for everyone. By declaring bankruptcy, the person in debt pays off a portion of the owed debts, and the remainder is discharged, giving both sides an opportunity to benefit from a bad situation.

Certain types of debts generally can’t be discharged through bankruptcy, such as child support, alimony, student loans, and some tax obligations. However, money owed to condos and HOAs is considered consumer debt and is dischargeable when a homeowner declares bankruptcy.

money owed to condos and HOAs is considered consumer debt and is dischargeable when a homeowner declares bankruptcy

What Happens When a Homeowner Declares Bankruptcy?

Bankruptcy cases are handled by federal courts, and federal law defines six different types. The two most common types used by individuals are Chapter 7 and Chapter 13, named after the sections of the federal bankruptcy code where they are described.

Chapter 7 bankruptcy, the type most individuals file, is also referred to as a straight bankruptcy or liquidation. A trustee appointed by the court can sell some of the homeowner’s property and use the proceeds to partially repay creditors, after which their debts are considered discharged. Some types of property can be exempt from liquidation, subject to certain limits. Those include vehicles, clothing, household goods, tools of the trade, pensions, and a portion of home equity. Homeowners list the property they are claiming as exempt when you file for bankruptcy.

Chapter 13 bankruptcy, on the other hand, results in a court-approved plan for the delinquent homeowner to repay all or part of their debts over a period of three to five years. Some of their debts may also be discharged. Because it does not require liquidating assets, a Chapter 13 bankruptcy can allow a homeowner to keep their home, as long as they continue to make the agreed-upon payments. Chapter 13 bankruptcy is the most common kind of bankruptcy filing by homeowners attempting to save their homes from foreclosure.

Chapter 13 bankruptcy is the most common kind of bankruptcy filing by homeowners attempting to save their home from foreclosure.

Collecting After Bankruptcy is Filed

In community associations, the registered agent (generally your manager or board president) will receive a notice that an owner has filed for bankruptcy and action must be taken. HOA and condo collections are serious business and if the association does not respond appropriately, you may not be in line to recover any delinquent assessments when the case is discharged by the bankruptcy court.

It’s incredibly important to remember that once you get notice of a bankruptcy filing, the management company CANNOT contact the owner to request payments. If you have sent the file to a collection agency or attorney, you need to notify them so that they too can stop all collections activity.

The association’s attorney will need to respond to the notice of bankruptcy with a ledger of all amounts due to the association. This is called a “pre-petition” ledger and it covers everything that was owed from the time the property owner went delinquent until the time he/she petitioned the court for protection under the bankruptcy laws. This ledger of delinquent condo or HOA dues is sometimes referred to as a ledger “in rem.”

It’s incredibly important to remember that once you get notice of a bankruptcy filing, the management company CANNOT contact the owner to request payments.

Next, the association needs to start a new ledger which should be called the “post-petition” ledger which covers what is owed from the time the owner filed for bankruptcy going forward. The post-petition ledger has nothing to do with the bankruptcy proceedings and the delinquent owner should be paying their assessments as usual after the initial bankruptcy filing.

Many believe being in bankruptcy means nothing needs to be paid, but that is not accurate. If the association is not receiving post-petition payments, then when the bankruptcy is discharged, they need to immediately start collections activity.

If a homeowner declares bankruptcy and fails to pay the post-petition amounts (assessments and other debts owed to the association) the association can ask the bankruptcy court to lift the automatic stay and allow collection efforts to resume. If successful, the condo or HOA can continue pursuing the debt.

the delinquent owner should be paying their assessments as usual after the initial bankruptcy filing.

Monitoring After a Homeowner Declares Bankruptcy

Monitoring a bankruptcy is critically important. Axela Technologies does this for all files that are placed with us, whether they are already in bankruptcy or file during collections activity.

Often it happens that a bankruptcy has been discharged and the community association does not even know about it, so the debt keeps on piling up with no resolution in sight. Axela Technologies uses PACER which is a database of all bankruptcy cases in the United States. When a case is discharged, the association should know about it and Axela will move the file forward if the owner has not paid their post-petition amounts or does not adhere to the court’s settlement agreement.

Bankruptcy is there to help and protect people, but there are those who will game the system and will postpone payment or just completely default. These are files that need to be addressed and worked on without delay. Call Axela for a no-obligation review of our collection process and technology. Let us show you how the future collects!

 

Tags: , ,