1. Assessment Collection
Presented by
Lella Amiss “Ami” E. Pape

2. Assessment Collection
How to increase your success at collection
How to limit your inability to recover
What are routine collection procedures

3. Increasing your Success
Starts with a working knowledge of your documents
Are you a HOA, POA or COA?
Collect EVERYTHING due you
Start the collection process early, rather than later
Be aware of and act on time deadlines

4. “The Finer Points of Collecting Assessments”
When should we demand payment in full? When should we settle?
Factors to consider:
the “20% rule” alive [and despised] in Fairfax Courts
Legal Cost and fees of post-judgment collection are NOT recoverable.

5. WHEN TO COLLECT Consider debtor’s payment history
Consider other personal factors
Recent unemployment
Recent heath issues

6. The Demand Process

7. What is the Attorneys next step?
We MUST abide by federal law, FDCPA
Prohibits communication with persons other than the debtor
We have to allow 30 days to pass after the initial communication
Part of our due diligence is to determine the following when an accounts is turned over:

8. What is the Attorneys next step?
Who owns the lot? We can only issue a demand to the lot owner
Did they own it during the applicable period
Are the assessment correctly assessed
Correct day, correct amount?
Are late fees permitted?

9. THE PROBLEM WITH LATE FEES
JUDGES ARE VERY PARTICULAR
Must Be Specifically Permitted Under Your Declaration/Bylaws (HOA) Or Bylaws (Condo)
Must Be Assessed On The Correct Date
Must Be In The Correct Amount With Supporting Documents If There Is A Change From What The Documents In Land Records State.

10. LATE FEES Application must be uniform
Double check your management company.
Are they haphazardly assessing late fees?
If your association is due it, are you leaving it out, and forgoing income to the association?

11. SETTLEMENT?
To Reach A Settlement, Late Fees Should Be The First Thing A Board Is Willing To Waive, Simply Because It Is Taxable Income To The Association.

12. LIEN STAGE ALWAYS, ALWAYS, ALWAYS SECURE A LIEN
Unauthorized Practice Of Law To Have Your Management Company Prepare And Record The Liens
Be Aware Of Your Lien Deadlines

13. LIENS CONDO- 90 DAYS OF ASSESSMENTS UNDER THE VIRGINIA CONDOMINIUM ACT
DECLARATION (INCHOATE LIEN) DEPENDS ON YOUR GOVERNING DOCUMENTS
HOA/POA- TWELVE MONTH OF ASSESSMENTS
LIENS VIRTUALLY ENSURE YOU WILL BE PAID*
(THERE IS ALWAYS SOME FINE PRINT) OR AT LEAST INCREASE THE ODDS OF PAYMENT!

14. Post Lien
THE NEXT STEP
Obtain the personal judgment by court action

15. PERSONAL JUDGMENTS LET THE ATTORNEYS DO THIS It Is Expensive
It Is A Charge To The Debtor
And There’s The 20 % Rule

16. Advantages: Secures The Debt Personally
Can Only Be Avoided In Bankruptcy.
When docketed in a county, it attaches to ALL real property owned by the debtor found in that county, not just the unit/lot in your cluster

17. POST JUDGMENT COLLECTION
Variety of means:
bank, wage, and tenant garnishments;
levies ( think cars and boats)
Threat of attachment of assets and/or property could encourage further payment

18. Disadvantages:
Legal fees incurred in post-judgment collection cannot be recovered
Difficult beforehand to know whether it will be successful
Monies collected can be applied only to outstanding judgment

19. WHAT ABOUT
NON-JUDICIAL
FORECLOSURE?

20. Advantages: Much less expensive than judicial foreclosure
Much faster than judicial foreclosure (approximately 6 weeks to 4 months)
Encourages debtor to pay the entire debt, or at least agree to a very aggressive payment plan
Gives Association means of dealing with the “long-term debtor”

21. Disadvantages:
More expensive than other means of collection ($2,000 - $4,000)
If property goes to a lender foreclosure sale, we cannot collect the debt unless there are ‘excess proceeds’

22. Problems with title Who owned it when What about foreclosure
What about bankruptcy
What about divorce
What about death
What about Servicemans Civil Relief Act of 2004

23. Formally the Soldier’s and Sailor’s Relief Act, now the Servicemans Relief Act of 2004
who: active military and dependants (spouse)
Military includes hospital staff, Coast Guard, and many other categories, such as reservist called up for active duty
what: grants a stay in civil proceedings if military service has materially affected ability to (1) protect rights and (2) meet financial obligations
does not relieve anyone of a just debt

24. What adjustments should be made in our collection process in light of recent events?
Increase in foreclosures
Leveling property values
Non resident owners
Requesting that they contact management if they are active military

25. CRITICAL – ADDITION TO ALL COLLECTION NOTICES YOU SEND
Also add language to late notice/ any notice regarding the debt that once an account is sent to the attorneys for collections, monthly statements do not include all fees and costs due.

26. Secure The Debt,
But Do Not Pursue Too Aggressively
[don’t become the latest Metro Section report!]

27. Be willing in all cases to waive what you can waive to obtain payment:
The Board can usually forgive all or part of :
Late fees
Accrued interest
Management turnover fees

28. Questions?