Mistakes Florida Communities Make When Collecting Assessments
Assessments (sometimes called dues or HOA/Condo fees) are the funds collected from association members to support the operation, maintenance, and management of the community. The collection of those funds in an efficient and timely fashion is paramount to the association meeting its financial obligations and preserving the value and functionality of the community.
Unfortunately, not all owners remit payment when due. In response, associations must implement collection procedures. These collection procedures to be effective must be conducted in strict compliance with the governing documents for the community and legal statutory requirements. When an association fails to follow proper procedures, the recovery of unpaid assessments can be significantly delayed or in some cases defeated.
COMMON MISTAKES
1. Failure to provide proper notice.
Solution: Collection notices must be delivered in a particular form along a timeline mandated by statute and the community documents. If you go into court without the proper notices that have been given, the delinquent owner may be able to defeat the claim.
2. Waiting too long to start collections.
Boards sometimes wait too long to start the collection process. This could cause a portion of the past due amounts to be uncollectible.
Solution: Except under unusual circumstances, an owner being delinquent in two or more regular monthly or quarterly assessments, an annual assessment, or a significant special assessment should trigger collection action.
3. Charging fees and interest which are not legally supportable.
Adding late fees where there is no authorization in the governing documents for late fees or charging interest in an amount that is not authorized by the governing documents or exceeds the amount permitted by Florida law can hinder the collection of valid charges.
Solution: Be aware of what the association’s governing documents provide and what Florida law requires. Ensure that late fees are only charged per assessment and the interest is applied pursuant to the governing documents.
4. Misapplication of payments.
The Florida Statutes provide specific guidance as to the application of payments for past due assessments. Owner payments applied in any manner other than those requirements hinder full collection.
Solution: Ensure payments are applied pursuant to the relevant statute.
5. Inaccurate or incomplete statutory collection notices.
Demand or delinquency which lack specific language or contain inaccurate information can expose associations to liability under federal and state fair debt collection/consumer protection laws.
Solution: Both the Condominium and HOA Act have specific requirements for the collection of past due assessments, including specific language which must be stated in collection notices, and those requirements must be strictly followed in order record a valid assessment lien. Work with the association’s counsel to ensure that notices follow all statutory requirements.
Successful assessment collections depend on consistency, timeliness, and strict compliance with governing documents and Florida law. Associations that do not implement uniformly appropriate collection procedures, delay action on delinquent accounts, charge improper fees and interest, misapply payments, and/or send inaccurate statutory notices risk legal challenges that can delay or even prevent recovery. By implementing a clear collection policy, following the statutory procedures under Florida law, and working closely with legal counsel, associations can ensure fair treatment of owners while protecting the community’s financial stability and ability to operate effectively.
