HOA Dues Late, foreclosure notification

[Matt C.]

Good morning!

I've recently had an issue with my HOA for one of my properties. I thought the HOA was being handled by the management company, but it is not. As a result my HOA fees have not been paid for 2017 or 2018. The association delivered certified mail to my tenant who was delinquent and ultimately evicted last week, meaning I never received any of the notices.

Last week I was served papers and contacted by the attorney regarding the payments, which was my first contact. At this point they're asking for $3,073.88 for $820 in assessments plus fees, including $1931.14 in legal. I'm frustrated because I do have an email address on file with the association, but they chose to enter into foreclosure before even sending an email. I also put the property into professional management in March 2017 and they notified the association to send correspondence to them.

I know I owe the payments for the assessment and at fault for the lateness of the penalties. My question is does the association legally share any fault? Do I have any grounds to negotiate a settlement?

[Linda Weygant]

I sit on the boards of 2 HOAs.  Your exact scenario is a huge source of frustration for boards of directors.

At one HOA, we have publicized (and re-publicized and over publicized) that the dues will be increasing every year for the next 5 years. We are currently in year 3 of this plan. Dues go up every June. We are doing this in lieu of having to do Special Assessments.

Every June, we have a ton of people that send in the same amount as May.  I direct our manager to send a courtesy email letting them know they paid the wrong amount.  Attached to that email is a statement.  No late fees are assessed.

The same thing happens in July.  I direct our manager to send a courtesy email AND snail mail.  No late fees are assessed.

The same thing happens in August.  I direct our manager to send a courtesy email AND snail mail.  No late fees are assessed.

Starting in September, late fees are assessed.  You wouldn't believe how that gets people crawling out of the woodwork, swearing they had no idea dues were increasing.  (Yes, they've been owners for several years)

Note that we are not required to do ANY of this.  We do it to help the homeowners.  Our covenants allow for late charges and interest as soon as one penny is 5 days late.

That works for 95% of people and they get caught up, however, there is always the 5% that are just like you.  Months and years go by and they send in the original amount from years ago, every month like clockwork.  At some point, the past due balance accumulates to the point where we send a certified letter to notify them they are going to the attorney.  Nothing.  

So off it goes to the attorney and BAM!  Some absentee landlord that has their property on auto pilot is suddenly P***** OFF and wants to negotiate.   In the meantime, I and all of your neighbors have paid the property manager to try to contact you, we've wasted money on envelopes and postage and have paid the attorney a fee to start your case (gets added to your bill, but still.)  (Note - these are the same auto pilot people who don't attend meetings and won't send in a proxy, but then complain about the decisions the board makes)

The answer - 100% of the time in these cases is No - No Negotiation. (This is where you, the homeowner, will start calling the HOA Board all kinds of foul names like Power Trip, Nazi, etc).

Here's how our hands are tied:

1 - in Colorado, the HOA's Management Company cannot act as a collection agency. They can send out statements and emails, but they cannot reach out by telephone (that's only for collection agencies or attorneys). So even though they may have your phone number on file, they are limited in notifying you of your balance due. Other states have similar collection laws.

2 - Even if you call in for a repair or maintenance, the management company can't "just happen to mention" your past due balance.  

3 - Even if you thought your property mgmt company was going to handle this for you, the HOAs management company cannot and will not discuss your past due balance with anybody except you, unless they have a specific Power of Attorney on file.  

So can you negotiate? Maybe, if your board has more patience than my board does. Here's what you'll have to pay at a minimum: 100% of Dues. 100% of Attorney Fees, 100% of any other fees that the HOA had to pay out of pocket. Late fees and interest might be the only part that's negotiable.