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:
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 assessments to be "debts" according to this definition: A debt...
The Fair Debt Collection Practices Act (“FDCPA”) was enacted by Congress to combat “abusive, deceptive, and unfair debt collection practices.” 15 U.S.C. § 1692(a). The FDCPA regulates the activities of debt collectors, defined as “any person who … regularly collects … debts owed … or due another.”
Recently, the 11th Circuit Court of Appeals addressed the issue of whether a homeowners’ association and its property manager are considered debt collectors under the FDCPA. In this unpublished case, a homeowner received a “Notice of Intent to File Lien” based on delinquent assessments along with a statement of assessments owed. The homeowner demanded an explanation of the assessments and insisted that he had paid a portion of the owed amount. The association mailed him a second notice with another statement of unpaid assessments to date. Two weeks later, the association filed a lien against the owner’s unit and a month after that, the association notified the owner of its intent to foreclose on the unit. Subsequently, the homeowner brought suit against his association and property manager based on alleged FDCPA violations.
The court determined that the association and its property manager were not debt collectors within the meaning of the act. Rather, the association was a creditor and the property manager was acting as its agent pursuant to the “Management Services Agreement.” The court also found that even if the association fell into the definition of debt collector, its actions in attempting to collect the homeowner’s past due assessments were not in violation of the FDCPA. Specifically, the association met the act’s requirements concerning verification of debt when it was requested by the homeowner.
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