Handling Delinquent Accounts according to the Law
Sept 30, 2014 20:29:05 GMT -5
Alaska HEMI R/T Jm Admin. likes this
Post by Admin on Sept 30, 2014 20:29:05 GMT -5
I am sorry that this is going to be pretty long post but to address the subject requires the insertion of the several laws and documents that address assessments and delinquencies. Following the extracted section of law, my own comments are preceded by "Editor" and are in RED.
I don't think there is anyone who objects to SLohA trying to collect assessments from owners when they miss their payments. However, there is something very wrong with a management entity that strong arms regular paying owners with Nasty Collection Letters threatening them with liens and then attempts to collect certified mail fees for their collection efforts. It was reported to me "casually" that it was asserted to a delinquent owner that "a lien would remain on the property for 25 years". This is not true. Liens will expire after 20 years if not renewed or removed. However UNTRUE, it is a moot point.
It is a demonstrable fact (and generally recognized) that the targeted parcel owner ALWAYS pays and is a longtime, beloved and responsible member of S-bag. This Delinquency Letter should never have happened. It would have taken less time to pick up the phone, but apparently that was not the path considered or chosen.
Attachment DeletedHere is the redacted letter to protect the innocent owner.
I would like to remind MANBOD that the population of S-bag is "elderly" and time passes differently for folks in the silver and golden years. Sometimes, we might ask other family members to assume certain responsibilities previously handled personally. Sometimes, a family member passes away and mundane things like an "assessment payment" takes a momentary back seat to grief. In others, there is lapsed memory and concentration. All these conditions can be be expected to impact Members from time to time and may affect payment behavior.
It is not an emergency for SLohA! -Have you ever thought about a HUMAN APPROACH--maybe pick up the phone before launching certified dunning letters?
Be reminded that Owners have already PAID for collection efforts as part of their Quarterly Assessment Fee which includes the Management Company agreement with SLohA (see below). The only fees which owners must additionally pay are those that are required by the state of Florida i.e. interest (see below) and those that occur from the time the account has become so delinquent as to require the services of an attorney or outside collection agency. Until then, the account is handled, per Agreement, by the 's Accounting Department, under the direction of the BOD (SOP?).
THE SUPERIOR LAW
Florida Statute 720.3085 Payment for assessments; lien claims.—
(1) When authorized by the governing documents, the association has a lien on each parcel to secure the payment of assessments and other amounts provided for by this section. Except as otherwise set forth in this section, the lien is effective from and sH all relate back to the date on which the original declaration of the community was recorded.
(Editor: The statute DEFERS to the governing documents i.e. Covenants (aka “Declaration, CC&R’s). SLohA Covenants do not provide for a lien to secure the payment of assessments. Everything else in the statute that is written about handling of accounts related to a lien right is—as they say in math, marriages and law—NULL.
Editor: This is an example of the Statute trumping the Declaration of Covenants. I have read that there are legal scholars who believe this is unlawful but the issue has not been duked out in a court of law. However, as it stands, statute provides that interest can be charged at 18% if not otherwise stated in the governing documents—which, in SLohA’s case, it is not. SLohA is not compelled to bill for interest expense by Florida law.
Editor: Inexplicably, the legislature deferred to the governing documents in the matter of “administrative fees”. This would reasonably include “all things administrative” i.e. the accountant time, computer, software, pens & pencils, envelopes and stamps.
SLohA Bylaws
Editor: Bylaws are a corporate document and do not have the power of the Covenants. Bylaws do not “run with the land” and are not part of the “contract”. Bylaws have a relatively low threshold to change i.e. 2/3 membership vs 100%. Bylaws describe the “How To’s” of the authorities and duties of the Association outlined in the Covenants. In this case, they describe the “levy and collect” duty of the Association.
Here is what the Bylaws say:
(Editor: The “b” bylaw is consistent with the Covenants. The “k” provision is inconsistent with the Covenants, as it awards a property right and duty to the Association that is not authorized by the Covenants. The Covenants give NO Lien Rights—for any purpose whatsoever—to SLohA. Therefore, SLohA could not acquire a parcel through enforcement of a lien. The Covenants only give SLohA the authority to levy and collect assessments sufficient to manage the common property and pay the taxes.
Bylaws are insufficient to overcome the vested rights and restrictions contained in the Covenants.
Here is what the ARTICLES OF INCORPORATION say:
Editor: The Articles of Incorporation can be considered as the “Why” this corporation has an existence and describe its mission. This clause, in my opinion, should be in the Bylaws. Notwthstanding its placement in the governing documents, this provision is in the same pickle as the Bylaws—it has no underlying authority TO LIEN A PARCEL, which authority can only be derived from the Covenants.
A CONTRACTUAL AGREEMENT
Here’s what the Management Agreement SLohA and Stmbug Ixx, INC. dba COMMUNITY ASSOCIATION MANAGEMENT SERVICES (Manager) says:
Editor: Note that the Management Company is to COLLECT the assessments, as directed by the Board, and must do this lawfulfully with regard to the Covenants and Florida Statutes. This Management Contract should not even mention a lien—it has no authority to pursue a lien even if directed by BOD.
EXHIBIT "B"
FEE SCHEDULE
Please Note: poSt age, stationery, long distance telephone, fax charges, payment coupons and/or envelopes, checks, and all supplies used specifically for the association will be billed monthly in addition to the above fees. Any additional services provided not in the contract will also be billed on an hourly basis. It is the intention of these charges to cover the costs associated with the service rendered, not to make a profit or increase management revenues. An itemized bill will be submitted
(Editor: The Management Company attempted “properly” to collect interest on the assessment, but it improperly charged for a certified letter. This is improper for two reasons: 1) a certified letter fee is, prior to turnover to the account to an outside collection agent, a Management agent expense of “levying and collecting assessments” and 2) such expenses are separately reimbursed to the Management Company by SLohA per the Agreement.
Billing the parcel owner for Certified Letters AND submitting that same expense to SLohA per Exhibit B would be tantamount to violating the intent in the Management Agreement “ …not to make a profit or increase management revenues”.
Editor: Here is what one would expect to see in the Covenants IF they permitted SLohA to have lien and foreclosure rights. These are the additional provisions which the Board tried to “slip in” on last year’s ballot by pretending that the Covenants gave them the right to offer an amendment vote to members:
Creation of the Lien and Personal Obligation of Assessments. Each Owner of any Lot by acceptance of a deed thereof, whether or not it sH all be so expressed in such deed, is deemed to covenant and agree to pay the Association: (1) annual assessments or charges; (2) special assessments for capital improvements, such assessments to be established and collected as hereinafter provided. The annual and special assessments, together with interest, costs, and reasonable attorneys' fees sH all be a charge on the land and sH all be a continuing lien upon the Property against which each such assessments is made. Additionally, the costs and fees incurred by the Association as a result of the Association's defense of any mortgage foreclosure proceeding as to any property, or similar proceeding where the Association asserts its lien rights and interest on a property, sH all also be a charge on the land and become part of the assessment and continuing lien on the property. All such assessments, together with interest, costs, and reasonable attorneys' fees for collection thereof, sH all also be the personal obligation of the person who was the Owner of such Property at the time when the assessment fell due. The personal obligation for delinquent assessments sH all not pass to his successor in title unless expressly assumed by them.
Subordination of the Lien to Mortgage. The lien of the assessments provided for herein sH all be subordinate to the lien of any first mortgage. Sale or transfer of any Lot sH all not affect the assessment lien. However, the sale or transfer of any Lot pursuant to mortgage foreclosure or any proceeding in lieu thereof sH all not extinguish the lien of such assessments as to payments which became due prior to such sale or transfer, as set forth in Chapter 720, Florida Statutes, which may be amended from time to time. No sale or transfer sH all relieve such Lot for liability for any assessments thereafter becoming due or from the lien thereof.Editor: The Association does NOT currently have lien and foreclosure rights against owners for unpaid assessments. That was what the Board attempted on the last ballot –to covertly add this restriction to the Covenants in the guise of a lawful amendment. The Covenants do not permit an Amendment. By law, such a modification of the Covenants must be approved by 100% of owners.
Editor: As usual, I have to do a disclaimer. I am not an attorney and the information contained here is meant for educational purposes and should not be relied on as legal advice. If you require legal assistance with regard to assessments or collection activity, you should seek the assistance of an attorney.
I don't think there is anyone who objects to SLohA trying to collect assessments from owners when they miss their payments. However, there is something very wrong with a management entity that strong arms regular paying owners with Nasty Collection Letters threatening them with liens and then attempts to collect certified mail fees for their collection efforts. It was reported to me "casually" that it was asserted to a delinquent owner that "a lien would remain on the property for 25 years". This is not true. Liens will expire after 20 years if not renewed or removed. However UNTRUE, it is a moot point.
It is a demonstrable fact (and generally recognized) that the targeted parcel owner ALWAYS pays and is a longtime, beloved and responsible member of S-bag. This Delinquency Letter should never have happened. It would have taken less time to pick up the phone, but apparently that was not the path considered or chosen.
Attachment DeletedHere is the redacted letter to protect the innocent owner.
I would like to remind MANBOD that the population of S-bag is "elderly" and time passes differently for folks in the silver and golden years. Sometimes, we might ask other family members to assume certain responsibilities previously handled personally. Sometimes, a family member passes away and mundane things like an "assessment payment" takes a momentary back seat to grief. In others, there is lapsed memory and concentration. All these conditions can be be expected to impact Members from time to time and may affect payment behavior.
It is not an emergency for SLohA! -Have you ever thought about a HUMAN APPROACH--maybe pick up the phone before launching certified dunning letters?
Be reminded that Owners have already PAID for collection efforts as part of their Quarterly Assessment Fee which includes the Management Company agreement with SLohA (see below). The only fees which owners must additionally pay are those that are required by the state of Florida i.e. interest (see below) and those that occur from the time the account has become so delinquent as to require the services of an attorney or outside collection agency. Until then, the account is handled, per Agreement, by the 's Accounting Department, under the direction of the BOD (SOP?).
THE SUPERIOR LAW
Florida Statute 720.3085 Payment for assessments; lien claims.—
(1) When authorized by the governing documents, the association has a lien on each parcel to secure the payment of assessments and other amounts provided for by this section. Except as otherwise set forth in this section, the lien is effective from and sH all relate back to the date on which the original declaration of the community was recorded.
(Editor: The statute DEFERS to the governing documents i.e. Covenants (aka “Declaration, CC&R’s). SLohA Covenants do not provide for a lien to secure the payment of assessments. Everything else in the statute that is written about handling of accounts related to a lien right is—as they say in math, marriages and law—NULL.
(3) Assessments and installments on assessments that are not paid when due bear interest from the due date until paid at the rate provided in the declaration of covenants or the bylaws of the association, which rate may not exceed the rate allowed by law. If no rate is provided in the declaration or bylaws, interest accrues at the rate of 18 percent per year.
(a) If the declaration or bylaws so provide, the association may also charge an administrative late fee not to exceed the greater of $25 or 5 percent of the amount of each installment that is paid past the due date.
Editor: Inexplicably, the legislature deferred to the governing documents in the matter of “administrative fees”. This would reasonably include “all things administrative” i.e. the accountant time, computer, software, pens & pencils, envelopes and stamps.
The SUPERIOR SLohA GOVERNING DOCUMENT OFF REC 1428 PAGE 152
Here is what the Covenants say:
Editor: The Declaration of Covenants aka “Covenants”, CC& R’s, “Declaration” can be thought of as the contract entered into between S-bag and Owners. Like all contracts, it can only be changed either “as agreed” in the contract or by 100% approval by all owners.
11. The S-bag Lake Property Owners Improvement Association, Inc. sH all levy and collect a reasonable monthly assessment against lot owners sufficient to cover each lot owner’s proportionate share of the actual cost of operating and maintaining all these said activities and for providing water, electricity and garbage disposal service, sewage service, general maintenance and carrying out of its managerial duties hereunder. Likewise, the Association sH all include in the assessment so made a sum adequate to pay all real property and other taxes on said facilities. The collection of these sums sH all be provided for in an adequate manner to assure the maintenance necessary. The assessments for expenses sH all be levied in accordance with By-Laws of the Association.
Editor: The Covenants permit the Association to levy and collect a monthly assessments in order to carry out its managerial duties and sH all include in that assessment enough to pay the tax bills.
12. These restrictions sH all be considered as covenants running with the land, and sH all bind the purchasers of all lots shown on the plat hereinbefore referred to, their heirs, executors, administrators, successors and assigns, and if said owners or any of them, their heirs, executors, administrators, successors or assigns sH all violate or attempt to violate any of the covenants or restrictions herein contained, it sH all be lawful for the Developer, the Association or any person or persons owning any lots in S-bag Lake to prosecute any proceeding at law or in equity against the person or persons violating or attempting to violate any such covenant or restriction and either to prevent him or them from doing so or to recover damages for such violation including costs of the suit and reasonable attorney’s fee.
Editor: If any parcel owner fails to adhere to the Covenants (i.e. to pay assessments) then the Association can prosecute the parcel owner in law or equity to prevent further violation and/or to recover damages suffered, including attorney’s fees.
This is NOT authority to place a lien against the parcel for unpaid assessments.
The Association can only pursue a civil judgment against the parcel owner and obtain a monetary judgment against an individual.
Here is what the Covenants say:
Editor: The Declaration of Covenants aka “Covenants”, CC& R’s, “Declaration” can be thought of as the contract entered into between S-bag and Owners. Like all contracts, it can only be changed either “as agreed” in the contract or by 100% approval by all owners.
11. The S-bag Lake Property Owners Improvement Association, Inc. sH all levy and collect a reasonable monthly assessment against lot owners sufficient to cover each lot owner’s proportionate share of the actual cost of operating and maintaining all these said activities and for providing water, electricity and garbage disposal service, sewage service, general maintenance and carrying out of its managerial duties hereunder. Likewise, the Association sH all include in the assessment so made a sum adequate to pay all real property and other taxes on said facilities. The collection of these sums sH all be provided for in an adequate manner to assure the maintenance necessary. The assessments for expenses sH all be levied in accordance with By-Laws of the Association.
Editor: The Covenants permit the Association to levy and collect a monthly assessments in order to carry out its managerial duties and sH all include in that assessment enough to pay the tax bills.
12. These restrictions sH all be considered as covenants running with the land, and sH all bind the purchasers of all lots shown on the plat hereinbefore referred to, their heirs, executors, administrators, successors and assigns, and if said owners or any of them, their heirs, executors, administrators, successors or assigns sH all violate or attempt to violate any of the covenants or restrictions herein contained, it sH all be lawful for the Developer, the Association or any person or persons owning any lots in S-bag Lake to prosecute any proceeding at law or in equity against the person or persons violating or attempting to violate any such covenant or restriction and either to prevent him or them from doing so or to recover damages for such violation including costs of the suit and reasonable attorney’s fee.
Editor: If any parcel owner fails to adhere to the Covenants (i.e. to pay assessments) then the Association can prosecute the parcel owner in law or equity to prevent further violation and/or to recover damages suffered, including attorney’s fees.
This is NOT authority to place a lien against the parcel for unpaid assessments.
The Association can only pursue a civil judgment against the parcel owner and obtain a monetary judgment against an individual.
SLohA Bylaws
Editor: Bylaws are a corporate document and do not have the power of the Covenants. Bylaws do not “run with the land” and are not part of the “contract”. Bylaws have a relatively low threshold to change i.e. 2/3 membership vs 100%. Bylaws describe the “How To’s” of the authorities and duties of the Association outlined in the Covenants. In this case, they describe the “levy and collect” duty of the Association.
Here is what the Bylaws say:
Bylaws Section 12B
b. To make and collect assessments from members for the purpose of operating and maintaining the corporation property and interests.
k. To pay any taxes or special assessments on any lots and parcels acquired by the corporation through the enforcement of any lien held by the corporation against said lots or parcels.
b. To make and collect assessments from members for the purpose of operating and maintaining the corporation property and interests.
k. To pay any taxes or special assessments on any lots and parcels acquired by the corporation through the enforcement of any lien held by the corporation against said lots or parcels.
(Editor: The “b” bylaw is consistent with the Covenants. The “k” provision is inconsistent with the Covenants, as it awards a property right and duty to the Association that is not authorized by the Covenants. The Covenants give NO Lien Rights—for any purpose whatsoever—to SLohA. Therefore, SLohA could not acquire a parcel through enforcement of a lien. The Covenants only give SLohA the authority to levy and collect assessments sufficient to manage the common property and pay the taxes.
Bylaws are insufficient to overcome the vested rights and restrictions contained in the Covenants.
Here is what the ARTICLES OF INCORPORATION say:
Article X Assessments & Refund
All unpaid assessments levied by the Board of Directors sH all be and remain, until paid, a lien upon and against said lots or parcels, provided such liens sH all not be effective against any person, firm or corporation contracting, purchasing, extending credit upon or otherwise dealing with the lot or parcel, unless and until notice of such lien is recorded by the corporation in the public records of Polk County, Florida, and the cost of recording sH all be added to the lien. No membership may be transferred on the records of the corporation until unpaid assessments on the lots or parcels for which lien sH all have been so recorded has been paid.
All unpaid assessments levied by the Board of Directors sH all be and remain, until paid, a lien upon and against said lots or parcels, provided such liens sH all not be effective against any person, firm or corporation contracting, purchasing, extending credit upon or otherwise dealing with the lot or parcel, unless and until notice of such lien is recorded by the corporation in the public records of Polk County, Florida, and the cost of recording sH all be added to the lien. No membership may be transferred on the records of the corporation until unpaid assessments on the lots or parcels for which lien sH all have been so recorded has been paid.
Editor: The Articles of Incorporation can be considered as the “Why” this corporation has an existence and describe its mission. This clause, in my opinion, should be in the Bylaws. Notwthstanding its placement in the governing documents, this provision is in the same pickle as the Bylaws—it has no underlying authority TO LIEN A PARCEL, which authority can only be derived from the Covenants.
A CONTRACTUAL AGREEMENT
Here’s what the Management Agreement SLohA and Stmbug Ixx, INC. dba COMMUNITY ASSOCIATION MANAGEMENT SERVICES (Manager) says:
a. Collect quarterly all assessments, special assessments, and all other monies due from Members of the Association. Said collection sH all occur pursuant to the Association's authorization, request and demand. Manager will be in charge of all collections, but the manner and extent of its efforts, such as the decision to institute a lawsuit or to file a lien against a lot owner or Member sH all be at the sole discretion of the Association acting through the Board of Directors or legal counsel.
Editor: Note that the Management Company is to COLLECT the assessments, as directed by the Board, and must do this lawfulfully with regard to the Covenants and Florida Statutes. This Management Contract should not even mention a lien—it has no authority to pursue a lien even if directed by BOD.
EXHIBIT "B"
FEE SCHEDULE
Please Note: poSt age, stationery, long distance telephone, fax charges, payment coupons and/or envelopes, checks, and all supplies used specifically for the association will be billed monthly in addition to the above fees. Any additional services provided not in the contract will also be billed on an hourly basis. It is the intention of these charges to cover the costs associated with the service rendered, not to make a profit or increase management revenues. An itemized bill will be submitted
(Editor: The Management Company attempted “properly” to collect interest on the assessment, but it improperly charged for a certified letter. This is improper for two reasons: 1) a certified letter fee is, prior to turnover to the account to an outside collection agent, a Management agent expense of “levying and collecting assessments” and 2) such expenses are separately reimbursed to the Management Company by SLohA per the Agreement.
Billing the parcel owner for Certified Letters AND submitting that same expense to SLohA per Exhibit B would be tantamount to violating the intent in the Management Agreement “ …not to make a profit or increase management revenues”.
Editor: Here is what one would expect to see in the Covenants IF they permitted SLohA to have lien and foreclosure rights. These are the additional provisions which the Board tried to “slip in” on last year’s ballot by pretending that the Covenants gave them the right to offer an amendment vote to members:
Creation of the Lien and Personal Obligation of Assessments. Each Owner of any Lot by acceptance of a deed thereof, whether or not it sH all be so expressed in such deed, is deemed to covenant and agree to pay the Association: (1) annual assessments or charges; (2) special assessments for capital improvements, such assessments to be established and collected as hereinafter provided. The annual and special assessments, together with interest, costs, and reasonable attorneys' fees sH all be a charge on the land and sH all be a continuing lien upon the Property against which each such assessments is made. Additionally, the costs and fees incurred by the Association as a result of the Association's defense of any mortgage foreclosure proceeding as to any property, or similar proceeding where the Association asserts its lien rights and interest on a property, sH all also be a charge on the land and become part of the assessment and continuing lien on the property. All such assessments, together with interest, costs, and reasonable attorneys' fees for collection thereof, sH all also be the personal obligation of the person who was the Owner of such Property at the time when the assessment fell due. The personal obligation for delinquent assessments sH all not pass to his successor in title unless expressly assumed by them.
Subordination of the Lien to Mortgage. The lien of the assessments provided for herein sH all be subordinate to the lien of any first mortgage. Sale or transfer of any Lot sH all not affect the assessment lien. However, the sale or transfer of any Lot pursuant to mortgage foreclosure or any proceeding in lieu thereof sH all not extinguish the lien of such assessments as to payments which became due prior to such sale or transfer, as set forth in Chapter 720, Florida Statutes, which may be amended from time to time. No sale or transfer sH all relieve such Lot for liability for any assessments thereafter becoming due or from the lien thereof.
Editor: As usual, I have to do a disclaimer. I am not an attorney and the information contained here is meant for educational purposes and should not be relied on as legal advice. If you require legal assistance with regard to assessments or collection activity, you should seek the assistance of an attorney.
