Live in a home governed by a condominium, co-op or homeowner’s association? Have questions about what they can and cannot do? Ryan Poliakoff, an attorney and author based in Boca Raton, has answers.
Question: I live in an HOA community of 50 townhomes. Who is responsible for trying to collect past due assessments? Is it the board of directors, the management company, the attorney or a collection agency? Also, do homeowners have the right to get information on settlement of a lien when a house is sold, as well as how much the HOA was able to collect from the estoppel? Signed, S.J.
Dear S.J.,
Let’s start at the beginning. A community association is a corporation tasked with the responsibility to manage and maintain property that is shared by homeowners.
In a condominium those homeowners own the entire property jointly and severally, and that ownership share is attached to each unit.
In a community governed by an HOA, the owners typically own their own lots (sometimes with shared elements like the walls between townhomes) and then they are mandatorily members of a homeowner’s association that owns common property for the residents’ benefit. And in a cooperative, a corporation owns an entire property, and each owner is a shareholder or member of the corporation and has a proprietary right to the exclusive use of a particular unit.
In all cases, the corporation is critically important. And, just like all corporations, your community association is operated by an elected board of directors. That board is tasked with making most policy and business decisions for the association on behalf of the owners. The board is a representative democracy, very similar to our own government. We elect board members that we hope will use their judgement in a manner that reflects our interests; and we have the power to change those board members if a majority of owners disagree with how they are carrying out their duties.
The community association is responsible for certain expenses, and it collects funds for those expenses through assessments. The assessments are based on an annual budget that estimates the operating cost of the association, and the total is divided up among the owners based on a formula described in the declaration of covenants, the declaration of condominium, or the cooperative bylaws.
So, in the end, the buck stops with the board. All the other people you described take their instruction from the board, and they have no independent authority.
A property manager does not have the right to collect money if their board tells them not to do so. Similarly, lawyers are not elected representatives who get to make policy for their clients. They answer legal questions to help boards make their own policy decisions, and if asked to do so they bring legal action to help enforce the association’s policies— such as collecting delinquent assessments or enforcing the covenants or rules. But as an attorney, I do not take any action (or even give advice) unless I am asked to do so. The same would be true of a collections agency. These are all professionals who are hired by a corporation to assist with the day-to-day business, but they are not the decision makers, and in the end, everything begins and ends with the board.
But what if the association’s manager or attorney aren’t doing their job? What if the board has instructed the manager to pursue delinquent assessments, but the manager refuses (or is unable) to do so? Or what if the manager has turned over accounts to the association attorney, but the attorney sits on them and doesn’t pursue those claims in a timely manner? Well, that’s why managers and attorneys can be fired.
The board is responsible for overseeing the operation of the association and deciding when one of its service providers isn’t working out; and making whatever decision is needed to get things on track.
So, in the end, it’s all about the board, but there are lots of people who could be screwing up and not helping to collect delinquent assessments. It’s up to the board to be present and knowledgeable about the business of the association and to act when things aren’t going in the right direction.
As for the records you asked about, those things are all either tied to public records or are inspectable association records (such as the estoppels); or they can be easily determined by looking at each individual lot or unit ledger (also an inspectable record). For example, if an association must write off a debt (for example, because a bank takes title in a foreclosure) that write off will be reflected in the financials. You should be able to piece together this information with an appropriate statutory request to inspect records.
Ryan Poliakoff, a partner at Poliakoff Backer, LLP, is a Board Certified specialist in condominium and planned development law. This column is dedicated to the memory of Gary Poliakoff. Ryan Poliakoff and Gary Poliakoff are co-authors of “New Neighborhoods — The Consumer’s Guide to Condominium, Co-Op and HOA Living.” Email your questions to condocolumn@gmail.com. Please be sure to include your location.
This article originally appeared on Palm Beach Post: Who collects fees, fines owed an HOA or condo board?
Reporting by Ryan Poliakoff, Special to the Palm Beach Post / Palm Beach Post
USA TODAY Network via Reuters Connect
By Ryan Poliakoff, Special to the Palm Beach Post | USA TODAY Network
