Collecting Past Due Amouts from Delinquent Condo Owners

logochp- small logo     4923_4x6@72 - Biz 1  Richard B Evans CHA CHAE CRME

1).          The Associations “Owner Coordinator” or “Condo Manager” should be authorized to send a letter to delinquent owners that are over 90 days delinquent.

2).          Guidelines should be set by the Board of Directors with the Owner Coordinator or Condo Manager in negotiating payment plans with past due owners and they should be empowered to create a LETTER OF AGREEMENT in which a payment plan is put into place.  The agreement should be formally executed and witnessed.

3).          If possible these past due owners should be persuaded to place their units into the hotel program so that cash coming in can be controlled.  The Condo is than able to collect past due amount directly.

4).          The application of late fees and interest charged must be consistent to all past due unit owners.

5).          If no response is received within 30-days, the matter should be handed over to an attorney specializing in collections.  A formal written agreement should be prepared between the attorney and the Board  of Directors.

6).          Normally attorney’s taking on such cases will collect their fees directly from the delinquent owner.  It is recommended that the condominium find an attorney that will adhere to these terms.  They do take some risk in collecting these fees, but this is normal in the industry.  (See item 13 below)

7).          The attorney prepares a “Notice of Intent to File a Claim of Lien Letter” and forwards it to the owner in arrears.

8).          If the delinquent owner does not pay within 30-days of notice then a second notice is sent stating that if no Agreement is made within 15-days the Claim of Lien” will be recorded with the Clerk of Court.

9).          Should no Agreement be reached then the Lien is recorded as mentioned and a foreclosure action is filed with the Court.

10).        After discovery is completed a MOTION FOR SUMMARY JUDGEMENT should be placed in front of a judge for a favorable ruling.  This forces the court to rule and thus forces the bank to foreclose.

11).        If the bank does not foreclose the condo’s attorney can move to have the unit taken from the delinquent owner and placed into the hotel program where all revenues generated would be used to pay the amounts in arrears.

12).        If no Motion for Summary Judgment is filed foreclosure usually takes approximately six months (time period) from the date of filing until Foreclosure Final Judgment.

13).        A written Agreement with the attorney should be executed.  Typical attorney’s fees and Courts costs are as follows:

  •                $200 –                  first attorney’s letter
  •                $200 –                  second attorney’s letter
  •                $200 –                  simple “Letter of Agreement” with owner in arrears
  •                $200 –                  Claim of Lien
  •                $400+                   Clerk of Court’s filing fees for foreclosure action
  •                $2,000                  prepare complaint and proceed with action to foreclose lien     if uncontested)
  •                $$ hourly fee      if contested and hearings need to take place.

Based on the Agreement with the attorney, the costs such as the Courts filing fee is paid by the Association or absorbed by the attorney and passed on to the delinquent owner when amounts become collectible.

14).        The fees should ultimately be collectible by the attorney when the unit is foreclosed upon.  However, if they cannot be collected due to foreclosure by first mortgagee or in the event that the Association obtains the title to the unit, then such fees would be payable by the Association.

I would like to thank Gus Perez, Esquire, who is a respected attorney in Coral Gables Florida whose firm typically represents banks in mortgage foreclosures and is familiar with the law as concerns the conflicting rights of owners, lenders and Associations.  Mr. Perez also served as a president of the Association at Marenas Resort in Sunny Isles Beach and is familiar with the nuances involved in collecting condo fees in arrears and/or negotiating payment plans for the same.  He would be pleased to speak to Boards seeking an attorney to collect and foreclose liens and can be reached at (305) 443-0774, gusperezlaw@att.net.

A condo-hotel perspective was provided by John D. Hess who we thank for his review and input.  Mr. Hess has been involved as an executive in the condo-hotel industry for over 15 years and has been involved in a considerable number collection matters.

Finally, I would like to thank the many Owner Coordinators and Condo Managers who I contacted with regard to their experiences in working with attorneys and collecting amounts in arrears from owners.

About Condo Hotel Answers by Richard Evans CHA, CHAE, CRME

Selected Current & Former Accomplishments ◾Currently preparing as event organizer, keynote speaker and lecturer for the first “Annual Condo-Hotel Conference“, Miami, Florida - sponsored by Florida International University (FIU), Greater Miami Convention & Visitors Bureau (GMCVB) and the Miami Hotel Association – June 21 & 22, 2013 at FIU North Campus. ◾Authoring “The Definitive Study of Condo-Hotels” for FIU and Other University use. Expected publication date is June, 2013 ◾Current BLOGGER: www. CondoHotelAnswers.com ◾Currently sitting on FIU panel to organize series of Revenue Management Programs. ◾May 17, 2013 - Panel member and assist FIU; Revenue Management: The Hotel in 2020 ◾Currently creating FANTASY REVENUE MANAGEMENT competition for Revenue Managers. ◾Current President of Condo Hotel Professionals LLC ◾Current volunteer to HFTP in making Condo Hotel Financial Statement suggestions toward better clarifying the financial position of the Condo-Hotel. •CHA – Certified Hotel Administrator – American Hotel & Lodging Assoc •CHAE – Certified Hospitality Accountant Executive – Hospitality Financial & Tech Professionals •CRME – Certified Revenue Management Executive – Hospitality Sales & Marketing Assoc Int’l •GMP – Cornell University Executive Training – Ithaca, New York •Produced: 3 Symphonies, Broward County – Symphony of the Americas raised funds for Cystic Fibrosis – Symphony of the Americas •Bachelors Degree: Long Island University – Accounting •Board of Director – Greater Miami Convention & Visitors Bureau •Board of Director – Ocean Drive Executive Committee, South Beach •Board of Director – North Beach Hotels, North Beach •Board of Director – SOBE TMA, SOBE •City of MB Transporation & Parking Committee – Task Force representing all MB hotels •Liaison with former Mayor Neisen Kasdin & all Miami Beach hotels / GMCVB Speaker - Revenue Management (Yield Management, Optimization)
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