(Editor’s Note: This question references and earlier question which can be found at http://askmistercondo.com/what-steps-does-the-hoa-take-to-place-a-lien-on-delinquent-unit/)
P.D. from New London County writes:
Dear Mister Condo,
WHOA, Mister Condo! Not so fast! March 9, 2015, B.B. in Litchfield County asked how to place a lien on a condo unit. You said a lien for an unpaid assessment is automatic. Fine, but THEN you, well, your attorney friend, said it was good only for three years! Three years go by in a flash! We are holding the bag for $150 that an owner withheld from a common fee payment without authorization to do so and even without documentation of what the $150 was for. That was a little over three years ago. This fact was recorded in the minutes of a subsequent meeting. We thought we had a permanent lien. So what happens after three years? And longer?! What further action can or should the association take?
Mister Condo replies:
P.D., I appreciate you taking me to task on any reply offered in this column, even one offered by one of my attorney friends. There is a big difference between a lien for non-payment of an assessment and collecting an underpaid assessment. Let me give you my opinion on the difference between the two.
I assume your governing documents have rules detailing what happens when a unit owner doesn’t pay the full amount of their monthly common fee or any other assessment in timely fashion. Generally, there is a short grace period (10 days or so), followed by a penalty or late fee. There is also usually a clause that states that any monies received by the association from the unit owner will be sued to pay the amount owed in arrears FIRST, before being applied to any current debt. If that is the case, as I suspect it is, you really are not holding the bag for the unit owner in arrears. In reality they are ongoing in arrears each month by the amount they owe the association. For instance if your common fees are $250 per month and the delinquent unit owner is currently paying $250 per month, the payment should be applied as $150 towards the arrears and $100 towards the current common fee. That way the common fees in arrear are once again $150. That $150 carries over fresh month to month until such time as it is paid.
From what you have told me, you are also missing an opportunity to levy late fees and penalties upon this delinquent unit owner. If your documents allow for doing so, I would suggest you bill for the amount called for in your documents. Further, you may have a case for going back and doing so for each month that this unit owner has been delinquent. However, keep in mind that the late fee is designed to get the unit owner to pay up. It is not an income source for the association. Since you haven’t implemented this policy in the past, I would encourage you to consider implementing it this next month and see if you can’t get the delinquent unit owner to pay up.
One other question I have for you, P.D., is whether or not you are using a collection agent. A qualified collection agent would be familiar with this tactic and would most certainly have had the delinquent unit owner pay up by now. Either way, your lien for the $150 is still intact as long as the payments have been applied properly. For when this unit is sold, if the delinquency hasn’t been paid, it will actually only be one month old which is well within the time allowed by the statute.
Thank you for reading the column and keeping me honest. Good luck collecting the association’s money!