HOAleader.com - Tip of the Week - January 29, 2021
Published: Fri, 01/29/21
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Legit or Not: HOA Manager Files Liens (Or Loans?) Against Owners
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In this week's tip, we address a reader's question that we first have to analyze to understand what's going on. An HOAleader.com reader asks: "We've recently discovered that our management company has filed new loans on all our homeowners' credit reports in their name without notifying the board or anyone in the association. No one knew. Can they do this?"
The first question our experts had was whether the reader got the terminology wrong.
If the reader is talking about loans, I have no idea what they're talking about," says Barbara Holland, CPM, regional director for FirstService Residential in Las Vegas.
It's also not clear to Alessandra Stivelman, who is board-certified in condo and planned development law and a partner at Eisinger Law in Hollywood, Fla. "I have an issue over whether it's a loan or a lien the reader is talking about.
"The management company needs to follow the direction of the board," she says. "If we're talking about a loan, I think it's unlikely the management company would take out a loan in the association's name without the bank documenting things like the collateral rights to collect future assessments. So I doubt it's a loan. It would be very difficult for management to get a loan without the board's approval."
Ditto for David Firmin, managing partner at Altitude Community Law PC in Lakewood, Colo., with satellite offices in Loveland, Colorado Springs, Durango, and Frisco. "It must mean liens," he says. "It can't be loans."
Let's assume that it's liens the management company is filing. That could be legit, but that's a closer call. Many courts have held that community association assessments aren't loans for the purposes of such statutes as the Federal Debt Collection Practices Act. "It's not debt at all," says Firmin. "Associations aren't extenders of credit, and assessments aren't debts under many statutes."
But that's not universal, so it's possible this management company could file a notice of lien for unpaid assessments on a homeowner's credit report. The next question would be whether they have authority from the board to take that action.
Read more—including why one of our experts thinks this could be a situation we warned readers about—in our new article: https://www.hoaleader.com/public/4268.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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Construction Contracts: Protect Your Condo/HOA from These One-Sided Traps
In a recent HOAleader.com article, one of our experts lamented construction contracts: "I tell every single client: I'm not trying to drum up business. Please send construction contracts to us," requested Jennifer Horan, a shareholder in the Naples, Fla., office of Becker & Poliakoff, who has represented condos and HOAs for more than 15 years. "Those are even more terrible than management contracts," she said at the time. What's so bad about them? Here are our experts' tips on strengthening your association's position in a construction contract.
Click here to read full article:
https://www.hoaleader.com/members/Construction-Contracts-Protect-Your-Condo-HOA-from-These-One-Sided-Traps.cfm
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Does a Condo/HOA Board President Vote on Issues Before the Board?
This question never goes away. Our experts explain whether a condo board president or chair should vote in every matter before the board or refrain from voting unless there's a tie.
Click here to read full article:
https://www.hoaleader.com/members/Does-CondoHOA-Board-President-Vote-on-Issues-Before-Board.cfm
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HOA Reader Asks: Is This an "Illegitimate Board"?
An HOAleader.com reader asks, "Covenants and bylaws state an annual meeting is to be held every March to elect new board members with terms being one year. Our HOA didn't hold an annual meeting this past March, so terms expired, but there wasn't an election..."
Click here to read full article:
https://www.hoaleader.com/members/HOA-Reader-Asks-This-Illegitimate-Board.cfm
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How to Read Your Association's Financial Reports (and Fulfill Your Fiduciary Duty)
Watch this information-filled webinar led by two community association management experts. These two veteran industry leaders covered the major financial reports for community associations, recordkeeping, how to spot potential fraud, and many more key financial topics.
Click here for info:
https://www.hoaleader.com/products/hoa-financial-reports-fiduciary-duty-b.cfm
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How Not to Dismiss Your Condo/HOA Owners' Concerns
Warning: Do not dismiss owners' concerns because you think you've heard them all before. We recently got a letter with an interesting twist on our usual approach. A reader wrote, "Any help for those of us homeowners who have issues with the indiscretions of that governing body...such as not following the existing rules?"
Click here to read full article:
https://www.hoaleader.com/members/Reader-Asks-How-Can-I-Make-Condo-HOA-Board-Follow-Rules.cfm
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