Assessment Collection
Presented by
Lella Amiss “Ami” E. Pape
Assessment Collection
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How to increase your success at collection
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How to limit your inability to recover
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What are routine collection procedures
Increasing your Success
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Starts with a working knowledge of your
documents
Are you a HOA, POA or COA?
Collect EVERYTHING due you
Start the collection process early, rather than
later
Be aware of and act on time deadlines
“The Finer Points of Collecting
Assessments”
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When should we demand payment in full?
When should we settle?
Factors to consider:
the “20% rule” alive [and despised] in Fairfax
Courts
Legal Cost and fees of post-judgment collection
are NOT recoverable.
WHEN TO COLLECT
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Consider debtor’s payment history
Consider other personal factors
Recent unemployment
Recent heath issues
The Demand Process
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Late notice letter
No payment?
Most Documents and
resolutions require a
second notice
(acceleration and to legal)
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No payment?
No Contact?
Send it on
What is the Attorneys next step?
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We MUST abide by federal law, FDCPA
Prohibits communication with persons other
than the debtor
We have to allow 30 days to pass after the
initial communication
Part of our due diligence is to determine the
following when an accounts is turned over:
What is the Attorneys next step?
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Who owns the lot? We can only issue a
demand to the lot owner
Did they own it during the applicable period
Are the assessment correctly assessed
Correct day, correct amount?
Are late fees permitted?
THE PROBLEM WITH LATE FEES
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JUDGES ARE VERY PARTICULAR
Must Be Specifically Permitted Under Your
Declaration/Bylaws (HOA) Or Bylaws (Condo)
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Must Be Assessed On The Correct Date
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Must Be In The Correct Amount With Supporting
Documents If There Is A Change From What The
Documents In Land Records State.
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LATE FEES
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Application must be uniform
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Double check your management company.
Are they haphazardly assessing late fees?
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If your association is due it, are you leaving it
out, and forgoing income to the association?
SETTLEMENT?
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To Reach A Settlement, Late Fees Should
Be The First Thing A Board Is Willing To
Waive, Simply Because It Is Taxable Income
To The Association.
LIEN STAGE
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ALWAYS, ALWAYS,
ALWAYS
SECURE A LIEN
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Unauthorized Practice Of Law To Have Your
Management Company Prepare And Record
The Liens
Be Aware Of Your Lien Deadlines
LIENS
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CONDO- 90 DAYS OF ASSESSMENTS UNDER
THE VIRGINIA CONDOMINIUM ACT
DECLARATION (INCHOATE LIEN) DEPENDS ON
YOUR GOVERNING DOCUMENTS
HOA/POA- TWELVE MONTH OF ASSESSMENTS
LIENS VIRTUALLY ENSURE YOU WILL BE PAID*
(
) OR AT LEAST INCREASE THE
ODDS OF PAYMENT!
THERE IS ALWAYS SOME FINE PRINT
Post Lien
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THE NEXT STEP
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Obtain the personal judgment by court action
PERSONAL JUDGMENTS
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LET THE ATTORNEYS DO THIS
It Is Expensive
It Is A Charge To The Debtor
And There’s The 20 % Rule
Advantages:
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Secures The Debt Personally
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Can Only Be Avoided In Bankruptcy.
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When docketed in a county, it attaches to ALL real
property owned by the debtor found in that county, not
just the unit/lot in your cluster
POST JUDGMENT COLLECTION
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Variety of means:
bank, wage, and tenant garnishments;
levies ( think cars and boats)
Threat of attachment of assets and/or property
could encourage further payment
Disadvantages:
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Legal fees incurred in post-judgment
collection cannot be recovered
Difficult beforehand to know whether it will be
successful
Monies collected can be applied only to
outstanding judgment
 WHAT
ABOUT
NON-JUDICIAL
FORECLOSURE?
Advantages:
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Much less expensive than judicial foreclosure
Much faster than judicial foreclosure
(approximately 6 weeks to 4 months)
Encourages debtor to pay the entire debt, or
at least agree to a very aggressive payment
plan
Gives Association means of dealing with the
“long-term debtor”
Disadvantages:
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More expensive than other means of
collection ($2,000 - $4,000)
If property goes to a lender foreclosure sale,
we cannot collect the debt unless there are
‘excess proceeds’
Problems with title
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Who owned it when
What about foreclosure
What about bankruptcy
What about divorce
What about death
What about Servicemans Civil Relief Act of
2004
Formally the Soldier’s and Sailor’s Relief
Act, now the Servicemans Relief Act of 2004
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who: active military and dependants (spouse)
Military includes hospital staff, Coast Guard, and
many other categories, such as reservist called up for
active duty
what: grants a stay in civil proceedings if military
service has materially affected ability to (1) protect
rights and (2) meet financial obligations
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does not relieve anyone of a just debt
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What adjustments should be made in our
collection process in light of recent events?
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Increase in foreclosures
Leveling property values
Non resident owners
Requesting that they contact management if they
are active military
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CRITICAL – ADDITION TO ALL
COLLECTION NOTICES YOU SEND
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Also add language to late notice/ any notice
regarding the debt that once an account is
sent to the attorneys for collections, monthly
statements do not include all fees and costs
due.
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Secure The Debt,
But Do Not Pursue Too Aggressively
[don’t become the latest Metro Section report!]
Be willing in all cases to waive what
you can waive to obtain payment:
The Board can usually forgive all or part of :
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Late fees
Accrued interest
Management turnover fees
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Questions?