Part I; Collection Procedures for Condominium &
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Last updated: Tuesday, December 11, 2007

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Part I; Collection Procedures: 

Collection of quarterly assessments is the lifeline utility of community associations. Without the collection of association dues, the budgetary commitment of the association could not be met. The services, maintenance and the preservation of the association are dependent of association dues. Since some community association disputes are over quarterly assessments, consistent operational procedures should be in place, so automatic collections can be conduced without prejudices. 

The rights to collect quarterly assessments are outlined in the community documents and Florida Statutes. These documents also give Board’s authority to prepare an income and expenses annual budget with a reserve schedule.  If the Board does not follow collection procedures described in the governing documents, there may be counter claims, which can cause unnecessary costs to the association. By following these documents, the Board can rightfully collect dues without dispute or recourse.

Condominium documents regarding, “Failure to Pay” are mostly standard. Below is an example of Condominium Declaration of Covenants, Application of Payments; Failure to Pay; Interest:

Assessments and installments thereon paid on or before ten (10) days after the date due shall not bear interest, but all sums not so paid shall bear interest at the highest rate allowed by law, calculated from the date due until paid. The Association may also impose a late payment fee (in addition to interest). Assessments and installments thereon shall become due, and the Unit Owner shall become liable for said assessments or installments, on the date established in the Bylaws or otherwise set by the Board of Directors for payment. All payments on account shall be applied to interest, late payment fees, court costs and attorney’s fees, and delinquent assessments. The Association may refuse to accept a partial payment, which bears a restrictive endorsement, and such will be the equivalent of no payment. No payment by check deemed received until the check has cleared.

Every association should establish and follow uniform collection procedures. The collection should have the same procedures for all members, directors and officers equally.

For example, the association might prepare a “reminder” letter. Customarily, a ten (10) or fifteen (15) day past due “reminder” notice. Anytime after late fees are added, the Association is entitled to begin lien processing. To avoid being last in line of competing interests (encumbrances), the account should be turned over to legal counsel no later than thirty (30) days of delinquency. Once the account is turned over, a “demand letter” will give owner thirty (30) days to pay in full, including interest, late fees and attorney costs. If the defaulting owner does not pay in full within the thirty (30) days, “the claim of lien” process begins. For Homeowner associations, a forty five (45) day demand notice is required before a claim of lien can be filed. Usually after this point, the owner pays in full and the remaining interest, late fees and dues are collected and returned to the association.

Condominium owners beware; if any assessments become delinquent, in most Condominium and Cooperative documents have an “acceleration clause”. This means, if a claim of lien is recorded in public records, then the association has the right to collect all assessments for the entire fiscal year. See sample Condominium Declaration of Covenants, Acceleration:

If any special assessment or installment of a regular assessment as to a Unit becomes more than thirty (30) days past due, and a Claim of Lien is recorded, the Association shall have the right to accelerate the due date of the entire unpaid balance of the Unit’s assessments for that fiscal year. The due date for all accelerated amounts shall be the date the Claim of Lien was recorded in the public records. The Association’s Claim of Lien shall secure payment of the entire accelerated obligation, together with interest on the entire balance, attorney’s fees and costs as provided by law; and said Claim of Lien shall not be satisfied or released until all sums secured by it have been paid. The right to accelerate shall be exercised by sending to the delinquent Owner a notice of the exercise, which notice shall be sent by certified or registered mail to the Owner’s last known address, and shall be deemed given upon mailing of the notice, postpaid. The notice may be given as part of the notice of intent to foreclose.

For relative posts see, “Changes for Homeowner’s Association” and “The Florida Regulatory Council of Community Association Managers Changed the Florida Statutes Again.” and lastly “Responsibilities of Association Directors & Officers“. If you are the select few who donate their time to serve on a board of your Association and/or a Florida Homeowner, you do not want to miss any new important posts. Please subscribe to our community. Or our complimentary email services.

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