Authored by Peter H. Harrison, Esquire
HOA’s are by and large mini-municipalities. Just as our local cities and counties are funded by the payment of taxes by the citizenry, HOA’s are funded by the collection of assessments from HOA members.
As a member of an HOA, whether it be a condominium or planned community, the association’s behavior on collections can directly impact the membership’s ability to sell. Many lenders will not finance a unit in an association with a delinquency rate of greater than 15% of the owners. This can leave members who would otherwise sell their units with limited options.
An effectively governed association will anticipate the problem of delinquencies and put in place a collection resolution ahead of time to address any potential concerns. Quality management companies and competent counsel should be able to assist an HOA through this process while simultaneously implementing a lien policy. Simply having a collections policy can often alleviate a delinquency problem from the beginning.
Once the collection policy is implemented, an HOA should ensure that the collection policy is enforced in an evenhanded manner. Collection efforts should never be pursued in a discriminatory or vindictive way.
The Utah Legislature has recognized the importance of an HOA’s legal rights to collect assessments in a cost effective manner. Both the Utah Condominium Ownership Act (UCA 57-8-49) and the Utah Community Association Act (57-8a-306) recognize the ability to collect reasonable attorney fees and costs when pursuing a legal action for a delinquency. Essentially the Legislature is clarifying that an HOA need not be burdened by both a delinquency from an owner and the additional cost of hiring an attorney to collect the delinquency.
If you live in an HOA that has collections issues, or would like to discuss how to implement an effective collections strategy please don’t hesitate to contact the attorneys at Miller Harrison.