Dealing With Sophisticated Debtors

Husch Blackwell LLP

Does your condominium or homeowners association (HOA) have owners who don’t pay their assessments? Owners are finding more excuses to avoid paying their assessments. Filing multiple bankruptcies, submitting payments with conditional language, NSF payments, claiming they don’t owe since they don’t use the common elements. . . The list goes on and on.

So how does your association handle these “Sophisticated Debtors”? Does your Association have a strong written collection policy? Are your governing documents updated and in compliance with current law? If not, your association will spend more than you should be in trying to collect unpaid assessments.

To ease the pain and headache of collecting unpaid assessments, make sure your association has:

  1. Up-to-date and enforceable governing documents, ensuring all documents are compatible (to learn more click HERE);
  2. An enforceable collection policy, that includes:
    1. Language on how payments are applied (i.e. interest first, late fees, then assessments);
    2. Recoverable attorney fees for collection;
    3. Strong language on NSF and conditional payments.
  3. A fining policy/schedule.
    • The policy should be progressive in nature (warning, $50 for first violation, $100 for second and subsequent violations; and
    1. If a tenant is in the unit, make sure your association knows how to fine correctly (click HERE to learn more on tenant fines).
  1. A grievance procedure.

A collection attorney who specializes in condominium law can assist your association in developing an enforceable collection policy, including a fining schedule, to ensure your association can pursue all remedies allowed the association under the governing documents and Wisconsin law.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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