Collection Policies

When an Association turns an account over for collection, the goal is to resolve the matter for the association as expeditiously as possible. However, oftentimes there are delays because of the comments made by the defendant in the courtroom.  Below are some of the most common questions/concerns that owners express in court.

1. Your firm is telling me one thing, but my Association is telling me something else.

            (Or the Association won't communicate with me at all!)

       Once the Association turns an account over for collection by a law firm, it should cease all communications with the owner. Board members and managers who are approached by owners who are in collections should refer any and all concerns to the attorney's office. This is a good rule of thumb in order to prevent any miscommunication, and to ensure that the owner is not receiving any conflicting information. Communication with the defendant, by the attorney's office, is a necessary part of the collection process.

2. I don't think I owe all the charges you are showing on my account. 

            Generally, it is easy to provide documentation to the owner showing the reason for assessments and late fees on the account.  However, defendants in court frequently see violation fees and other charges on the account and refuse to agree to pay those amounts without "proof" (in the form of supporting documentation) that those fees are owed.  Thus, it is important for managers to keep good records to support any charges on the account that the Association is trying to collect in court.  Examples include written notices prior to violation charges being assessed to the account and invoices for maintenance work performed.  A frequent challenge in court occurs when an Association is unable to provide backup for charges incurred under a previous company's management.  New management will need not only account statements reflecting back to a zero balance for all the owners, but all the documentation to support charges that were incurred under the old management company.  If we do not have the documentation to support charges, it can make it challenging and sometimes impossible to collect those amounts in court.

3. I admit I owe this money, but I can't afford to pay it.

            Unfortunately, this is probably the most common comment heard in court.  No doubt, this is not a valid defense to avoid paying amounts that are due.  However, judges can be sympathetic to certain defendants that present particularly unfortunate circumstances.  These owners often seek to repay their Associations with payment plans.  Thus, if your Association accepts payment plans, it should first obtain a money judgment and an order of possession.  Such a court order will permit the Association to act quickly if there is a default in a payment plan.  Next, be sure to apply objective criteria to any and all plans so that no owner feels picked upon if his/her plan is rejected.  Lastly, if your Association does not accept payment plans, be clear about that position in writing.

 4. I am being picked on by the association.

            Judges do not like inconsistent treatment of owners.  The consistent handling of a delinquent account can help affirm that the Association was not singling out a unit owner.  Remember, the judge is ultimately trying to make a fair ruling.  If the Association has a standard way that it handles all delinquent accounts, it virtually eliminates the unit owner’s argument of being treated unfairly and will likely result in more favorable rulings.  There are many reasons why having a set collection policy may be helpful to an Association, but one of the most persuasive is that having a rigid collection practice will result in more success in court.

            From the moment suit is filed, the Association’s actions are put under a microscope and examined by the judge.  The judge is charged not only with deciding whether or not the unit owner was delinquent, but also whether the Association properly handled the account.  This is where a standard collection policy can be helpful.  The reason it is helpful is that a formal collection policy shows the judge the basis for each step of the Association’s process.  It also provides him with authority for any administrative charges which may be assessed before the account is turned over to the attorney’s office, which may otherwise seem arbitrary.

           

            While judges are proponents for formal collection policies, keep in mind that they are also helpful to the Association.  Formal collection policies alleviate the need for the Board to be consulted on every payment plan request.  They also provide clear guidelines for management and collection staff.  Additionally, when unit owners are aware of the specific consequences of defaulting on their account, they may be less likely to become delinquent.  In light of all of these considerations, we highly suggest that every Association implement a formal collection policy.