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Community living: Delinquent condo owners and unpaid dues create budget challenge

Delinquent owners and bad debt are a bad mix

Q: I am a board member of an 18-unit condo association. We have three delinquent owners. Liens have been filed by the association on the delinquent units. We do not know how to handle delinquent owners, which caused us to have $9,000 in unpaid dues. Does the board assume there will only be 15 payers and allocate the expenses to those 15? We are also facing a hefty assessment for structural work to be done and have the same questions.

A: I strongly suggest you seek the guidance of an attorney and begin foreclosure. FS 718.116 says that liens are valid for one year. Your budget should be calculated on the 18 units but you need to add new line items such as legal costs (those costs for the foreclosure action) and a line item for uncollected funds or bad debt. Unfortunately these new line items will increase the fees but that would be expected.

When it comes to the rules, enforce, enforce, enforce

Q: What is the definition of selective enforcement? Are associations required to apply rules fairly and uniformly? Is there literature on this subject?

A: I have said that the final rule enforcer is the judge. In other words, the board and the rule violator must follow certain requirements and guidelines so that a judge can rule and make a proper solution. When a board fails to follow proper rule enforcement policies, they will lose the right to enforce a rule. There are four defenses a rule violator can use: laches, when enforcement is not timely enforced; waiver, when enforcement is given up; estoppel, formal written documents that exclude or fail to document a violation; and selective enforcement, when only some violations are enforced while others with the same violation are not enforced. If the board does not follow certain enforcement policies uniformly, any enforcement taken to court will cause the judge to rule against the enforcement. To find source information, you would need to talk to your attorney.

Cleanup efforts create quandary for HOA

Q: I have a question regarding payment on maintaining vacant homes in our HOA. We have several vacant homes in our single-family home development. Neighbors have been maintaining the outside, cutting the grass, etc., so the neighborhood does not look shabby. A few have made comments about having the HOA reimburse them for their time and expenses. One homeowner sent us a bill for his work. Is the HOA obligated to pay this? Could we add the fees to an estoppel letter once the homes ever sell so the HOA is not out any money?

A: What you are discussing is called "self-help." The association or neighbors rarely have the right to enter on another property without permission or with certain rights to make these improvements as described. Normally most documents and statutes allow the association to enter upon the property to make repairs or necessary improvements, but you need to take certain steps to limit liability. I would suggest that you have your attorney send a notice letter to the owner of the vacant property. The attorney can provide guidance to the board in such situations on how to take such actions. What you need is evidence of trying to locate the owner. Sometimes, you can send a letter to the mortgage holder and ask them to make the necessary repairs or cut the grass or even pay for such maintenance. I hesitate to say pay the neighbor for his/her efforts at cleanup because they did not receive authorization from the board to perform the work. Maybe send a letter to the neighbors that the board will attempt to collect the funds from the past owner, the new owner or the mortgage holder and then pay for the maintenance. Yes, you can include estoppel letters or send collections letters/notices to the owner. Your attorney and CPA/accountant will provide the action necessary.

Richard White is a licensed community associations manager. Write to him at 6039 Cypress Gardens Blvd., No. 201, Winter Haven, FL 33884-4115. Please include your name and city.


Community living: Delinquent condo owners and unpaid dues create budget challenge 01/14/11 [Last modified: Friday, January 14, 2011 3:30am]
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