One of the things that can undo an association is its delinquencies. During the mortgage crisis, delinquencies were the cause of significant “cutting back” in association expenditures because the money was simply not there. Unfortunately now if a bank has foreclosed on a property, those past assessments that went unpaid are also, most likely, gone. If your association has a high delinquency rate you may have noticed that some services have been cut such as pool maintenance being performed twice per week instead of three times or the common area grass is not as green as it’s been in the past.
Collection of past due assessments costs money. It’s not as easy as bombarding a homeowner with endless collection letters requesting payment. To have any teeth to the association’s collection process, a number of things have to happen. First, reminder letters then collection letters should be sent. Then the filing of liens by the association against the property. This requires an attorney’s blessing and the costs of filing and recording with the county Clerk of the Court. At this point, the association can pursue a few different options. One option is the foreclosing of the property, eviction of the owner and the association assuming their rights to the property. But by assuming the rights to the property, the association also assumes payment of the mortgage. A second option is the pursuit of a Final Summary Judgement which will allow the association’s attorney to pursue collection actions such as garnishment of wages or checking accounts. This will possibly get the association some of the money its owed but not all of it.
A question that is asked routinely is “Why can’t we just publish the names of the delinquent homeowners?” Because this can lead to legal action against the Board of Directors and association by the delinquent owner in the event the financial circumstances have changed in the time the names are published. Check out this blog post by Donna DiMaggio Berger of Katzman, Garfinkel and Berger, an HOA attorney.
However, as an owner you are entitled to know how many owners are delinquent and what the total amount is outstanding. This information can provide owners with a clearer understanding of the financial picture of the association.