7 Deadly Sins of Collecting Delinquent Assessments

7 Deadly Sins of Collecting Delinquent Assessments

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1.    Failing to follow the specific procedures in your community association’s Governing Documents such as written notice from the association of the delinquent debt. Often times such failures, when objected to by a delinquent owner, requires the entire collection process to be restarted. Sometimes, such failures lead to expensive lawsuits and a large payout to the delinquent owner.


2. Agreeing to payment plans that are not in writing. A payment plan that is not in writing, is not worth the paper it is written on. Secure all payment plans in writing.


3.  Extending grace periods and granting concessions to neighbors and friends but no one else. It is understandable you want to help a neighbor or friend that is having problems with paying your association’s assessments. However, each owner has to be treated in the same, uniform manner. Extending grace periods only to friends or neighbors exposes the entire community association to an expensive lawsuit from an aggrieved owner to whom a grace period was refused.


4. Publishing a list of delinquent owners.       Shaming debtors is not only insensitive, it violates the Federal Fair Debt Collection Practices Act and exposes the association to an expensive lawsuit.


5.     Failing to follow the specific collection deadlines in your community association’s Governing Documents. If the collection deadlines are too long or too short, have them amended. In the meantime, collections must proceed in accordance with the specific deadlines contained in your association’s Governing Documents. Failure to do so can easily lead to an expensive lawsuit and a large payout to the delinquent owner.


6.  Failing to add interest and late fees onto delinquent assessments. Many community associations are unaware of their ability to impose late fees or are unable to properly calculate interest. Foregoing late fees and interest can significantly undermine a community association’s financial stability.

 7. Failing to timely forward a delinquent account to your attorney for collection. Depending on whether it is a condominium or homeowners’ association, attorneys are required to wait between 60 and 90 days prior to the institution of foreclosure litigation. Banks are required to pay only 12 months of delinquent assessments. Sometimes, a bank will wait years before filing a foreclosure lawsuit.       Association’s that fail to act timely and foreclose upon a delinquent owner’s home and rent the home until the bank takes title, can cost an association a year or more of assessment payments.


For help with avoiding the 7 Deadly Sins of Collecting Delinquent Assessments, and for a free analysis of your association’s community association collections, please complete and fax the following to: (561) 750-8185. A representative from Gerstin & Association will contact you to set up your community association’s free collection analysis.


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Association name: _____________________

Position at the association (director, property manager, etc.) _____________________

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Florida Supreme Court Alters Community Association Declarations, In a Big Way

Did Florida’s Supreme Court render laws governing condominium and homeowner association declarations useless and unenforceable?

Florida’s community associations across the state are becoming increasingly concerned the legislature can no longer pass laws that affect Florida’s condominium and homeowner associations after the Supreme Court’s recent decision in Cohn v. Grand.  Florida’s community associations should be concerned and need to take action, but as explained below all hope is far from lost.

The Facts:

1.      The Grand was a condo hotel.

2.      When owner Cohn purchased a unit the Grand the Declaration stated “unit owners would governed by the “the Condominium Act of the State of Florida in effect as of the date of recording this Declaration.”

3.      The Declaration did not include the phrase, “as amended from time to time.”

4.      The dispute specifically arose as to whether the unit owners are afforded voting rights in accordance with the Condominium Act in effect at the time the Declaration was recorded or were said voting rights altered over time by each amendment made to legislation relating to condominium associations and in particular voting.

The Legal Argument:

Unit owners’ contractual rights, defined by the terms of the Florida Condominium Act (“Act”) at a fixed point in time, do not vary when changes to the Act are made because the term “as amended from time to time” was not included in the Declaration.

Florida Law Applied to the Facts and the Legal Argument:

An overriding principle embedded in the Florida Constitution is that “state action” (legislation) that impairs a contract is unconstitutional. In determining whether legislation impairs a contract a three part test is used and the results are weighed and balanced:

1)      To what extent are the contractual rights impaired;

2)      Does the state have a good reason for enacting policy that changes contractual rights; and

3)      Are the means the state will use to achieve this policy reasonable?

The issue in Grand related to owner voting which has long been considered a substantive right. As such, the Court gave greater weight to item # 1 above and less to item # 2.

The Court’s Decision:

The Florida Supreme Court held “The Constitution prohibits the impairment of contracts; and the statute regulating mixed-use condominiums (F.S. 718.404(2)) impaired the Grand’s unit owner’s contractual rights, which are established in the Grand’s declaration.” In other words, the law at the time the Declaration was recorded, not at the present time, was the law that applies to owners’ voting rights in the Grand.

Click here to read the Court’s full opinion

What This Means to Your Association:

The Grand decision should not be read as the end of legislative control over Florida community associations.. Surely, rules relating to enforcement of covenants would not be considered a substantive right that any  legislative changes would be outweighed and nullified. Instead, each such case will be reviewed by the courts on a “case-by-case” basis, if the magic words “as amended from time to time” is not in the Declaration.

What to Do:

Check your community association’s Declaration and determine whether the drafter included the words “as amended from time to time” in relation to statutes that will be used to enforce and interpret the Declaration (Condo. Act or HOA Act.). If not, speak with your community association’s attorney and begin the process of amending your community association’s Declaration.