Having difficulty staving off the rising tide of delinquencies? And are the circumstances that have put your association in this position outside of your control? You can’t control the economy or extinguish the existence of foreclosures and bankruptcies in your community, but you can control how you respond to these and other scenarios that tend to drain the association’s coffers. Below are some scenarios to common delinquency problems:
Scenario: THE REPEAT DEBTOR
Every year the same homeowner falls behind in assessment payments. You have to jump through the collection hoops of sending a demand letter, filing a lawsuit, garnishing the wages, etc., and all the while spending chronic attorney fees and collections costs. At the end of it all, you are eventually paid in full (hopefully), but the next month the same owner is delinquent again and you have to start the whole process over.
Acceleration allows you to accelerate the entire fiscal year’s debt against the owner’s account, rather than the current delinquency (which could amount only to a couple of months). This makes it more economical to bring a collection action against the owner, by pursuing a single collection action (and a single set of legal fees/administrative costs) against the owner, rather than multiple actions throughout the year. This is a good remedy for repeat debtors.
Scenario: THE DELINQUENT LANDLORD
A landlord owner has stopped paying assessments. But the tenant continues to pay rent to the landlord, who keeps the rental income rather than paying off debt owed to the association. This causes other owners, who are paying their assessments in a timely fashion, to make up the difference in delinquent assessments from the landlord owner.
Solution: SEIZE THE RENT
Why should the landlord owner get the benefit of the tenant’s rental income, when you are not getting the benefit of the owner’s assessment income? An assignment of rents provision allows you to get a court order permitting the association to step in and take the rent directly from the tenant to satisfy the association’s lien.
Scenario: THE EMPTY UNIT
Whether due to an owner filing bankruptcy or a lender foreclosing on a unit, an owner has decided to abandon a property within the association. The unit sits empty, unused and unkempt. Meanwhile weeks, months, years go by without any assessment income from the unit.
A receivership is a court ordered appointment of a rental agent for a property within the association. The receiver will prepare the property for market, rent the property, collect the rent and pay you the rental income per the court’s order. Once the debt is satisfied, the receiver is discharged from his/her obligations and the receivership is dismissed.
Scenario: EVER-MOUNTING ATTORNEY FEES
You’re sick of paying attorney fees to collect on delinquent assessments. Enough said.
The availability of the above solutions will depend on whether your governing documents contain the appropriate language. And, the effectiveness of any particular solution will depend on the facts of the individual case. Please contact us at 303.432.9999 if you would like more information on whether any of the above remedies are a fit for you.