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Q&A: A Hard Place

Q I am the property manager for a medium-sized condo association. There is an  owner who is several months behind on their assessment. We have followed the  standard protocol of the association of sending out notices and it is reached  the point where we have to put them in collection. The owner lost her job a  couple months ago, so we have tried to remain sensitive to the situation, but  the delinquent payments keep accumulating. What should we do next? Do we place  a lien on the property? Is there anything in Florida law that dictates the time  frame for such situations?  

 —Falling Behind  

A “While it is very unfortunate that the owner in your community is facing  unemployment and its accompanying financial difficulties, the fact is that the  Board of Directors has a fiduciary duty to the membership to pursue the  collection of delinquent assessments,” says attorney Leigh C. Katzman of Katzman Garfinkel & Berger, a community association law firm with offices throughout Florida. “In other words, it is not the board’s choice but its obligation to pursue collection of delinquent accounts. After  all, each non-paying account places an additional financial burden on the  association and its members who are current in paying assessments. That being  said, the proper course of action for this matter, as well as for all other  delinquent accounts is to turn them over to the association’s legal counsel for timely commencement of collection efforts.  

 “Collection efforts require strict compliance with statutory guidelines and  timeframes. The requirements imposed by statute are in addition to any  requirements contained in the association’s governing documents or properly adopted collection policy. The most important  of these statutory guidelines deals with notice requirements. The collection  process begins with notifying the delinquent owner of the association’s intent to place a lien on the property if the account is not brought current  within thirty (30) days for condominiums (forty-five (45) days for homeowners’ associations.) This notice must be sent via certified mail, return receipt  requested to the last known address of the owner as reflected in the  association’s records.  

 “If the owner does not pay the amounts due in full pursuant to the Notice of  Intent to Lien, a claim of lien is recorded against the property in the county’s public records, and the owner is notified in writing of the association’s intent to foreclose the lien. Once the delinquent owner is given notice of the  association’s intent to foreclose the claim of lien, the association may proceed with a  foreclosure action. In a condominium association, a thirty (30) day Notice of  Intent to Foreclose, the lien must be provided (forty-five (45) days notice is  required for a homeowners’ association.)  

 “An association may foreclose its claim of lien by filing a foreclosure action  with the court, which is handled in the same manner as a mortgage foreclosure.  In addition, the association may bring an action seeking a money judgment  against the owner of the property without waiving its claim of lien. Provided  that proper notice of intent to foreclose its lien is given, if successful, the  association is entitled to an award of attorney’s fees incurred in connection with its action to foreclose a lien or to recover  a money judgment for unpaid assessments.  

 “Of course, at any time during the collection process, the association may permit  the owner to enter into a payment plan which provides for at least full  maintenance going forward and a reasonable amount toward the arrearages each  month. Generally, it is recommended that payment plans should only be permitted  to span a reasonable amount of time, and should provide that if all  installments are not paid timely, the owner waives all defenses and the  association can proceed with its foreclosure action.  

 “The reality is that in today’s economy, most communities cannot afford to allow delinquent accounts to spiral  out of control, and must take an aggressive approach with delinquent owners.  While the association may believe that it is being sensitive in sending  multiple delinquent notices and not immediately initiating collection efforts,  it may be doing more harm than good. Delaying the collection process and allowing delinquent amounts to balloon only  makes it that much harder for the owners to pay and for the association to ever  collect. After all, it is generally easier to resolve a small debt than a large  debt. Therefore, it is generally recommended that the association adopt a clear  collection policy that treats all owners in a similar manner, provides for no  more than one warning from the association before turning the file over to  legal, and places all owners on notice that all accounts delinquent in excess  of a certain time frame will be referred to legal counsel so that collection  efforts can commence.”    

 

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