Lobeck & Hanson assists our Association clients in the collection of assessments for common expenses. After the Association or its management has made its attempt to collect a past due assessment (often with the warning letter that if payment is not received by a deadline, the matter will be turned over to the attorneys and that then additional fees and costs will be due) the matter is referred to this firm.
In a condominium, we prepare an initial thirty day collection letter, with the Federal Fair Debt Notice and Statutory Notice of Intent to Record a Claim of Lien. If the unit owner has not paid in full after the due date, a second thirty day collection letter is prepared, along with preparation of the Claim of Lien, and the Statutory Notice of Intent to Foreclose Delinquent Assessment. That full payment is calculated in the letters and include interest, costs, attorney's fees and any authorized late fee. If the unit owner does not ay within the time provided, we then seek authorization from the Association for the foreclosure action.
The HOA process is the same, except that two 45-day letters are required in sequence.
Typically, the owner will pay upon being served with the foreclosure action, if not before. This has remained our experience despite an increase in the number of instances in which owners are abandoning units to foreclosure. In those instances the Association may take title and either seek to rent to unit or seek to deed it to the first mortgagee, to at least begin to obtain income from the unit for the Association. The Association also has the option of then seeking a money judgment from the former owner.
This firm also assists our Association clients when they are served as a defendant in a mortgage foreclosure lawsuit, in order to defend the Associations entitlement to delinquent assessments to the extent they remain due under the law.
Once a first mortgagee takes title to a unit it is liable for twelve months of delinquent assessments in an HOA or six months of delinquent regular assessments in a condominium (not to exceed 1% of the original mortgage debt, which is seldom an issue).
It is important that an Association be diligent in collecting delinquent assessments. Otherwise, delinquent assessments can pile up on a unit and be lost through a mortgage foreclosure or bankruptcy. In assessment collections, our goal is always to recover all costs and attorneys fees incurred by the Association, as well as the assessments, interests and late fees, using the clear entitlement to such collection under the state law and most governing documents.