Q: Our condominium association treasurer is writing off most of our delinquent owners as “highly unlikely to ever pay maintenance fees.” Is this legal? I do not believe that any owners’ delinquencies should be forgiven through a bad debt allowance.
Some of these owners are still living at our condominium in their units, have paid off their mortgages and are defaulting every month on maintenance fees. The collections attorney who has filed liens against some of these owners is ineffectual and the cases have been dragging on in the courts for years.
It was my belief that receivables could be special assessed and, unfortunately, paying owners would have to pay for those who do not pay. But our board of directors has apparently opted to just allocate most of the non-paying units into “Bad Debt Allowance.” I don’t think the bad debt allowance category was created for defaulting owners.
We have to balance our budget and cannot do this unless delinquent owners pay or unless the association levies a special assessment.
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A: From the information provided in your question, it appears that your board does not understand its responsibilities dealing with delinquent owners. In addition, if your attorney is only filing liens then you need a new attorney.
My recommendation would require the board to establish a delinquency collection policy and have it reviewed by a qualified association attorney. It would require that any owner who does not pay on time receive a collection letter when the unit is 10 days delinquent. Another letter would be sent when the account is 30 days delinquent and a certified final letter sent when the account is 40 days delinquent.
If the owner does not pay, the matter needs to be turned over to an attorney to file a lien. If the lien is not paid within 30 to 60 days the attorney should be instructed to start foreclosure. If it is properly filed, then the courts should have a final foreclosure notice in 60 to 90 days. If your board or your attorney is sitting on the paperwork any longer, I consider them negligent in their duties.
A caveat: If you haven’t had collection activities for one year against a delinquent owner, then the board cannot collect that delinquent account.
The board does not have a right to simply allow an owner not to pay maintenance fees. A bad debt write-off is highly improper. A special assessment against delinquent owners to collect back fees is not a proper way of collecting fees owed. It may be time for your board to seek information on its responsibilities and engage professionals to help.
Q: At the board meeting last night, the board voted to hire a manager. It is spending $10,000 of our money to do this. We questioned the spending and board members told us they could because our documents only say they cannot spend more than $2,500 on capital improvements and hiring a manager was not a capital improvement. Is this true? Can they do this because a manager of the association is not a capital improvement?
A: Your board of directors has the power to engage professionals such as attorneys, accountants, CPAs, engineers, and management to help operate the association and advise the board on the operations of the association. It has nothing to do with capital improvements.
Your board members are volunteers who have assumed broad responsibilities. They give their time and effort for the members and the association. Many have never been on a board and have little experience in directing an association or property management. They can engage, at any cost, these professionals to do the work and advise the directors in their job duties.
Members’ votes for the expense of engaging these professionals, including management, are not required. Look at it this way: did you not vote at the annual meeting to elect the directors? That vote gave the directors the rights, obligation, and responsibilities to maintain and operate the association. Engaging employees and contract professionals to help is within the board’s powers.
Q: Our homeowners association documents prohibit dogs and cats. About four years ago a man moved in with two dogs. Our manager has sent him notices to remove the dogs but the dogs remain today.
He is also erratic in the payment of his fees and the board has filed liens on his property, but none of the liens has been foreclosed because he pays before the final papers are filed.
Since he has had the dogs for so many years would that mean that he has an exemption from the rules making it legal for him to have dogs?
A: If the board has attempted to enforce the rules without success, it still has the right to take the owner to court. If the board has not actively attempted to enforce the rules, the owner may have the legal right to keep the dogs. The problem is that too many lawsuits have been filed in similar cases and judges have taken the attitude of “another dog lawsuit.”
This does not mean that the board should not attempt to enforce the rules. I would suggest that the board seek answers from the association attorney on the proper procedures to enforce the rules.
As to paying late, I hope that the board has applied the cost of filing the liens including attorney expenses.
When it comes to rules enforcement and collection of late fee payments, the board needs legal advice from the association attorney.