Dealing with assessment delinquencies
Q: I have been the president of our condo association for seven years and this is the first time that we are faced with several owners who are delinquent in paying their assessments. I know we need to take action but I’m not sure how to proceed.
A: Delinquencies are rising throughout the country and foreclosures are increasing as well. You are wise to take steps to minimize the losses of uncollected assessments for your association. If you have not already done so, your first step should be to establish a uniform collection procedure that should be followed without exception.
The procedure usually begins with a reminder letter that is automatically sent by your management company or your on-site manager as soon as an owner is 10 days past due in paying an assessment. The letter should mention interest and late fees if your documents call for these.
As soon as the account is 30 days delinquent, it should be turned over to your attorney for collection. It is important that this be done promptly because owners who are 30 days delinquent may be in serious financial difficulty and may be falling behind in the payment of other debts. The longer you wait, the greater the chance that legal action by other debtors will take precedence over yours.
Your attorney will send a demand letter that gives the owner 30 days to pay the account, including interest, late charges, costs and attorney’s fees. Should the unit owner not respond, your attorney will file a claim or lien. Most owners who are not in very serious financial difficulty usually pay their outstanding amount before this occurs.
The claim of lien perfects your association rights by making a public record that it has a claim against a unit owner for unpaid assessments. This claim, a necessary step should you wish to actually file a lawsuit, is recorded in the same manner as a deed of mortgage.
Your attorney will send a certified letter to the unit owner when the claim of the lien is filed. This letter will contain the amount that is due, including interest, late charges, attorney’s fees and costs. The letter puts the owner on notice that you will begin a foreclosure action if the account is not paid in full within 30 days. This step is required by statute before a condominium association can obtain a foreclosure judgement.
The final step is the filing of a foreclosure lawsuit. This is the process used to enforce the claim of lien. Seek the advice of an attorney before you begin the collection process, especially if you have an unusual number of owners who are delinquent in paying their assessments.
Attorney Sylvia Heldreth is a Certified Specialist in Real Estate Law. Her office is located at 1215 Miramar Street in Cape Coral.
This article is intended as specific legal advice to anyone and is based upon facts that change from time to time. Individuals should seek legal counsel before acting upon acting upon any matter involving the law.