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May 16, 2007
ASSESSMENT COLLECTIONS - HOW MUCH CLOUT IS FAIR GAME?
There are two sides to every issue. On the one hand, there are the owners who are against assessment increases, and against the serious remedies for non-payment of assessments. And many, many people on both sides of the issue are afraid that the foreclosure rates will seriously increase in the coming months. It is crisis time. It is hard to support the tough remedies. Few people want to see a family lose their home.
So what's the other side? Try this: what about those people that can afford to carry their own fair share of the burden, but fail under the burden of trying to cover the debts of others?
Here is a question sent by a reader:
"I am on the board of directors of the HOA at my condominium. We have several owners that are behind on their monthly fees ranging from a few months to a year and a half. These add up to tens of thousands of dollars that we desperately need for repairs and reserves. We have jumped through all of the usual legal hoops; letters, fines, liens, etc. with no results except the animosity of the offending owner. Unfortunately, these people usually wind up declaring bankruptcy and we are the last ones to belly up to the money trough and end up with nothing. In the meantime, we have provided these people free water, sewer, hot water and trash service for the entire time they have refused to pay, leaving the other owners to subsidize them.
If this were an individually metered complex and the owner stopped paying for a utility, it would eventually be shut off. Since a large part of the monthly HOA fee pays for common utilities like these, we are in effect the utility provider. As such, do we have the ability to stop delivering these services based upon nonpayment? I put this question to our property manager, and their legal people said we do not. All we could do is take away their common area privileges like the spa, etc. What are our options?"
So, how would you like to be sitting in this person's chair? It's a tough place to be.
As for shutting off utilities, some associations do have such a right written into their governing documents and do threaten to shut off the utilities, and do shut them off when the bill is not paid. But as to whether this legal or not, or a good idea or not, it is something that should be left to the Association's individual legal counsel to discuss with the association. It's a serious remedy. Still, it is not as drastic as taking someone's home away by foreclosing, so it would seem to be a more palatable option than selling the home on the auction block.
In any case, as I said, there are two sides to every controversy. It is helpful to understand that in setting policy and choosing courses of action.
Posted by Beth Grimm at May 16, 2007 9:07 PM