Q: Due to my job loss, I couldn’t afford my mortgage payment and thought I was going to lose my condo. Since the lender would not work with me at the time I was unemployed, I quit paying my association fees. Now I am finally employed again but earning only a quarter of my previous salary. My lender is now working with me on what I owe in back payments but there is nothing in writing.
I also paid the homeowners association some of the back fees but still owe for four months. My HOA has sent my account to a collection agency and put a lien on my property. The last letter I received from them is threatening to start foreclosure proceedings. The collection agency sent me a payment plan and I would pay them, not the association. The payment plan outlined has me paying over double the amount I owe the association and the board has to still approve the plan.
Is this legal? Do I have any recourse?
A: Since your file went to collections, you owe not only your association fees but you also owe late fees, interest fees, demand letter fees, lien fees and any other miscellaneous collection fees.
You have the right to see the exact amount of money that you owe in detail and to review that information with the collection agency. The amount you now owe is the difference between the association fees for 2010, the four months of assessments that you missed and the various collection, late, legal and interest fees that was charged against your account by the collection agency. Unfortunately, when you decided to stop paying your assessments, you incurred these extra expenses.
As to the approval of a payment plan, often the board of directors do not meet until another time period. Generally speaking, specific information is sent to the management company and from there the information is e-mailed to the directors for their comments and or approval or rejection or recommendation.
Homeowners should contact their management companies and board of directors first when they know there is a financial problem in paying their monthly assessment to see if the association can arrange some kind of payment plan. The association does not have to accept a payment plan but many associations are accepting plans in light of the economic conditions of Southern Nevada. No one wants another vacant home or another home owned by a lending institution.
Associations mirror the structure of a government. Your assessments are like property taxes which you agreed to pay when you purchased your home as stated in the covenants that you accepted and that are recorded against your home. Part of that agreement, just like your mortgage, is that you will pay your assessments which are needed in order to operate the community.
From a different perspective, many homeowners are very upset because they are carrying the financial obligations of the association with assessments not being paid, whether it is a homeowner who has stopped paying or foreclosure of the property with the new owners not paying fees. The association has a fiduciary obligation to the membership at large. You had an opportunity to contact the association at the very beginning at which time the association could have presented a different payment schedule prior to your file being sent to collections.
Barbara Holland, CPM, and Supervisory CAM, is president of H&L Realty and Management Co. To ask her a question, e-mail email@example.com. To view a power point presentation of the new laws that were recently passed affecting HOAs, visit hlrealty.com, click on press release button on the left side, then click on article title, “The 2009 Legislation for common interest communities.”