Homeowners Association: Common Problems
The Importance of Staying on Top of Your Community Association Assessments
Homeowners Association Collection Issues:
As counsel for Homeowners’ and Condo Associations, I received a lot of calls from homeowners who are in collections. All too often, they are surprised by the amount they owe and wonder how it became so high. I hear things such as “I know I missed a month or two, but I’ve paid since then. Why do I still have an unpaid balance?”
Homeowners Association Right to Collect:
What most homeowners are unaware of is that a Homeowners’ or Condo Association may be entitled to statutorily permitted interest and late fees on any balance that is past due. What homeowners also may not know is that once a payment is made after interest has been applied, the interest and late fees may get paid first (and also any costs or attorneys fees associated with collecting any past due assessments), and then any remainder is applied to the assessments.
Homeowners Association in Practice:
For a simple example, let’s say that a homeowner owes $100.00 in assessments. They then accrue $5.00 in interest and $5.00 in late fees. If the homeowner pays $100, only $90 would actually be applied to the assessments, because the interest and late fees of a total of $10.00 were paid first. That means the homeowner still has an unpaid balance of $10.00 that can continue to accrue interest and late fees. In this example, the effect could seem small, but for a homeowner with assessments for a few hundred dollars and multiple missed payments, it is easy to see how the amount could quickly balloon into thousands of dollars. Unfortunately, when the amount of an undue balance gets too high, a lien on the property and possibly foreclosure is possible.
How Can A Home- or Condo Owner Protect Themselves? Answers on Homeowners Association.
- Be Proactive with your Homeowners Association: Being proactive is perhaps one of the best methods for a homeowner to protect themselves. Some things you can do as a homeowner or condo owner to avoid any issues are:
- Check the Laws: Check the laws in your state and be aware of the order in which costs associated with overdue assessments are paid.
- Maximum Interest that Homeowners Association can collect: Find out if there is a maximum amount of interest and late fees that can be charged under the law of your state.
- Interest rates: Check with your association and find out what they have set their interest rate and late fees at, and when they begin to accrue so that you can make your payments timely.
- Don’t Procrastinate: Procrastination is not a homeowners’ friend. Regardless of how unfair you feel it is for an association to foreclose a lien on your property for a small amount of outstanding debt, they may be entitled to do so. So upon first notice of having a past due assessment, you should act immediately rather than allowing the situation to escalate.
- Getting behind with Homeowners Association: In the event that you do get behind on payments, a home- or condo owner should try to enter into a weekly, or monthly payment plan with the association. While the association is probably not required to enter into a payment plan with you, a lot of associations are willing to do so. Some will even suspend interest as long as you comply with the terms of your payment plan.
Hiring the Smith & Eulo Law Firm:
- Though our firm generally represents the homeowners association, we occasionally represent home- and condo owners, if there is no conflict of interest involved. If you have a question regarding your rights or responsibilities within an association, contact one of the attorneys at Smith & Eulo Law Firm today and let us discuss your concerns with you.