It is undeniable that assessments and/or maintenance fees are the lifeblood of a community association or cooperative. The failure of a member to meet his or her payment obligations can do great harm to that community. Every board has a fiduciary duty to seek the recovery of all unpaid assessments and/or maintenance fees. The collection of unpaid assessments and/or maintenance fees by any entity or person, other than the board itself, including counsel is subject to the United States Fair Debt Collection Practices Act.
Condominiums and Homeowners Associations
Collection of unpaid amounts often requires the involvement of legal counsel. Counsel generally begins with a demand letter. Failure to make payment will then result in the recording of a lien against the unit or home. Often service of the lien on the member (which is required) results in payment or an offer of payment. Continued non-payment will force the board to continue efforts.
Foreclosure
A foreclosure, just as a bank will, can be filed for the purpose of divesting the member of his ownership of the unit or home in question. Ultimately, payment in full must be made, or arrangement made, or the member will lose ownership following a sheriff’s sale. Foreclosure is a good option for a community and the steps and relevant issues should be reviewed and discussed with counsel.
Money Judgment
A community can also file a lawsuit against the record member(s) seeking a personal judgment against them. This action, unlike a foreclosure, is not connected with the association’s lien. Once a judgment is entered, the board can seek to collect on it via wage execution, bank levy, personal property levy, either individually or at the same time
Cooperatives
Cooperatives collect unpaid amounts via a lawsuit by which it seeks both a personal judgment against the shareholders, together with the recission of their shares in the cooperative. Recission of the shares results in the shares returned to the cooperative, which can thereafter be sold. The judgment entered can be collected via those collection actions discussed above.”
