Since assessments are fees for maintenance and use of utilities and not consumer debt, many association board members wonder if their communities are subject to the Fair Debt Collection Practices Act (FDCPA). Some may be surprised to learn most state and federal courts consider assessment to be “debts” according to this definition:
Nevada homeowner associations and their collection agencies have scored a tactical victory in one of the many lawsuits pending over what critics call inflated assessments and collection costs that buyers of foreclosed homes are expected to pay.
Authors: Community Associations Network National
It is a rare condominium or homeowner association that has yet to face the challenge of the pecuniary consequences of delinquent assessments.
Prior to the economic downturn that began in 2008, there were many portfolio managers, myself included, who managed associations that had never experienced the financially crippling effects of numerous delinquencies. Because they were so rare and infrequent, there was a tendency toward leniency and inconsistency, and legal action was rare.
But when your neighbors cannot pay their association dues, the balance radically shifts and those who can pay must pay extra just to keep the grass mowed, refuse removed and roofs from leaking. In harder hit associations, reserves are compromised to fund basic monthly operating costs.
Q: What do I do if I receive a Notice of Bankruptcy Filing?
A: You should inform your collections attorney immediately if you receive notification that a homeowner has filed bankruptcy. If we have an active collections file against the homeowner, we are required to suspend further collections efforts against the homeowner while the bankruptcy is pending.
If we do not have an active collections file against the homeowner, we recommend you forward the notice to your collections attorney anyway. We are able to access the Bankruptcy Court’s records and can file any paperwork necessary to be sure that the association is protected throughout the bankruptcy proceedings. We can also monitor the proceedings and update you as to any significant developments in the proceedings.