Montreux Homeowners Association repossession process BY PETER

Step 1 Collection Policy – If the Association does not have a collection policy already in place, we would recommend that they adopt one at this time. The collection policy would outline how the Board treats delinquent accounts, how many months the account would be delinquent before being turned over to the Association’s attorney, what the late fee is, etc. This would give the Board a process to follow as far as sending delinquency notices and giving owners an opportunity to resolve their accounts prior to legal action/fees. I.Attorney would charge a flat fee-$200 to draft a collection policy tailored to the Association’s governing documents.

Current Collections Policy 9.9 Effect of Non-Payment of Assessment; Remedies of the Association. Any assessment not paid within ten (10) days after the due date shall bear interest at the rate of twelve percent (12%) per annum until paid, but not exceeding the maximum rate permitted by law. Each Owner hereby expressly vests in the Association, through the Board or its agents, the right and power to bring all actions against such Owner personally for the collection of such assessments as debts and to enforce lien rights of the Association by all methods available for the enforcement of such liens, including foreclosure by an action brought in the name of the Association in like manner as a mortgage of real property. Such Owner hereby expressly grants to the Association the power of sale in connection with such liens. The liens provided for herein shall be in favor and for the benefit of the Association. The Association shall have the power to bid in an interest at foreclosure sale and to acquire, hold, lease, mortgage and convey the same. The Owner is responsible for payment of all attorneys' fees and costs incurred in collecting past due assessments or enforcing the terms of assessment liens. No Owner may waive or otherwise escape liability for the assessments provided

Step 2 Demand Letter and/or Lien – If the Association has sent delinquency notices and the account has NOT been resolved, it could be turned over to the attorney office for a demand letter and lien. (They review each charge on the ledger to make sure it is authorized by the CC&Rs for the Association. We then draft a demand letter which is sent to the owner, outlining the details of the debt and providing them with options of how it can be paid and giving them 30 days to contact us to make arrangements.) They can also record a lien against the property. Recording a lien gives notice to any other lienholders (lenders or other creditors) and potential purchasers that there is a debt owed on the property. The lien would have to be paid and released before the property could be sold. I.Flat fee of $325 to draft a demand letter and lien together, and that flat fee covers all work during the initial 30 day demand period. There is also a $72 recording fee charged by the county. (If discovered that the owners have filed for bankruptcy, attorneys would bill bankruptcy-related work on an hourly basis.)

Step 3 Final Letter – If the account is not resolved within the first 30 days, attorneys can send a more strongly worded letter to the owner demanding payment within a certain period of time and threatening legal action if the owner does not make alternate arrangements with the Association to pay off the account. I.Flat fee of $50 for the second letter, plus postage costs.

Step 4 Foreclosure Lawsuit and/or Personal Lawsuit – If the account is still not resolved, the Association can proceed with a lawsuit to foreclose its lien on the property and get a personal judgment against the owners, which can be used for garnishment purposes. I.Flat fee of $1,800 for an uncontested foreclosure lawsuit and there are additional costs for filing fees, service costs, etc. that usually total about $1,000. (If the owner contests the lawsuit, they bill at our hourly rate for contested portions of the lawsuit.)

Step 5 Receivership - If the unit is not owner occupied (either vacant or a tenant is living there), we can request that the Court appoint a receiver to take possession of the unit and either collect rent from the current tenants or rent it out on the Association’s behalf. The receiver is paid out of the rental proceeds, and forwards the surplus to the Association to pay down the owners’ account. This option is not available if the owner lives in the unit, and is only an option once a foreclosure lawsuit has been filed. Flat fee of $1,000 for an uncontested receivership motion. The associated costs are fairly low - $100-$200.

Step 6 Sheriff’s Sale - The Board will have the option, once a judgment is obtained, of directing us to move forward with a Sheriff’s Sale of the property. A third party may purchase the unit at the sale, or the Association may become the owner of the unit and can rent it out to apply that income to the debt owed. I.Flat fee of $1,000 for a Sheriff’s Sale, and there are additional costs of about $800-$1,000.

Step 7 Garnishment - Once we obtain a personal judgment, we can attempt to garnish the owner’s bank accounts and/or wages. We usually have to have an investigation performed first to locate bank accounts and confirm employment. Investigations are about $300 per person, per type (bank account vs. wage). If we proceed with garnishment, we charge a flat fee of $300 per writ and there are additional costs of about $200 per writ.