HOAleader.com - Tip of the Week - July 11, 2014
Published: Fri, 07/11/14
=================================================================
Does Your HOA Need Quick Cash? Know the Risks Before Turning to "Factoring"
=================================================================
In this week's tip, we discuss the pros and cons of a tactic you can use to get
quick funds when your HOA finds itself strapped for cash. It's called
"factoring," and there's a ready market if you're interested.
Factoring, most simply defined, means selling your accounts receivable in
exchange for a fee, whether it's an immediate fee or a fee paid if the
purchaser eventually collects the debt.
In some states, laws may limit your ability to enter into a factoring
agreement. "I don't hear about factoring too much," says James R. McCormick
Jr., a partner at Peters & Freedman LLP in Encinitas, Calif., who represents
associations. "Some associations do assign their debt to a collection
agency. However, a California statute precludes associations from
assigning their delinquencies unless it's the account of a prior owner.
That covers the vast majority of delinquencies, which are usually current
owners."
It's also not common in Massachusetts because of a statute that makes it
unnecessary. "It's not something we see in Massachusetts," says Robert
Galvin, a partner at Davis, Malm & D'Agostine PC in Boston who specializes in
representing condos and co-ops. "We have very powerful superlien law that
gives condos a lien for six months of condo expenses that even comes before
first mortgages. So if your association filed the collection lawsuit
today, your lien would encompass the six months immediately before today
and would take priority even over the first mortgage. Therefore, there's no
reason to factor your accounts receivable or borrow against them because
you're all but certain to get paid.
Galvin explains how that law typically shakes out. "There's a requirement
in Massachusetts that 30 days before you sue, you have to send a letter to the
mortgage holder," he says. "When they get that letter, most banks just
ordinarily pay the delinquency. The unit is often owned by somebody current
on the mortgage but who hasn't paid the condo fees. The bank just pays the
amount and then adds it to the mortgage amount because they know that if the
association does sue, the association's debt come before the mortgage."
That doesn't mean you can't consider it. However, before you do, make sure
you understand the drawbacks. They're serious, and they're covered in our
new article: http://www.hoaleader.com/members/1031.cfm
Best regards,
Matt Humphrey
President
=================================================================
Recent articles posted at HOAleader.com:
=================================================================
Easier Enforcement of Your HOA's Rules: Steps to Create
Enforceable Rules, Effective Fines, and a Fair Violation Process
HOAleader.com Webinar
Enforcing rules doesn't have to be a pitched, tense, and unpleasant battle
between your homeowner association board and your homeowners. With some
smart planning, you can make enforcing your HOA's rules fairer,
quicker, easier, and less stressful.
Join us for an in-depth webinar on July 31 led by two community
association experts: a lawyer with more than a decade of hands-on experience in advising associations on how to create and enforce
rules, along with a veteran association manager with insights on the
day-to-day operations of rules enforcement. You'll get practical
ideas, systems, and processes you and your condo or HOA board can
begin to take advantage of the minute the webinar ends.
Click here to read full article:
http://www.hoaleader.com/snip/168.htm
=================================================================
Does Your HOA Have a Kid-Related Rule Like This One? Rethink It.
In May, the U.S. Department of Housing and Urban Development announced a
settlement with a Denver-area apartment complex over its rules governing
kids' behavior in the complex. The settlement requires the owners to, among
other things, build a $10,000 playground.
Click here to read full article:
http://www.hoaleader.com/members/Does-Your-HOA-Have-Kid-Related-Rule-Like-This-One.cfm
=================================================================
HOA to Owner: No Cleanup? Then We Tear Down
Thinking of demolishing an owner's property to teach a lesson about
complying with HOA rules? A Texas appellate court in Evans v. Davis and Happy
Hide-A-Way Civic Club says that's a very bad idea.
Click here to read full article:
http://www.hoaleader.com/members/HOA-Owner-No-Cleanup-Then-We-Tear-Down.cfm
=================================================================
Does "Self-Help" for Your HOA Include Demolishing an Owner's Home?
We really don't think you'll ever do something like this. But on the off
chance that you're thinking of demolishing buildings on an owner's lot to
teach a lesson on upkeep, we suggest you don't.
Case in point: Evans v. Davis and Happy Hide-A-Way Civic Club, a November
2013 opinion from a Texas Court of Appeals reminding HOAs that they can't
demolish an owner's property for failure to maintain it without following
some basic rules. Here's the skinny.
Click here to read full article:
http://www.hoaleader.com/members/Does-Self-Help-for-Your-HOA-Include-Demolishing-Owners-Home.cfm
=================================================================
HOA Management Companies:
A Practical Guide for Homeowners Association Boards
In this exclusive HOA management special report, we offer insight
and guidance on finding a good HOA manager and determining whether
you need an onsite manager, must-have and must-not-have contract
language, and tips for responding when your management company
isn't doing its job, including guidance on when to cut ties or work
toward a better relationship. We also educate going-it-alone boards
on best practices for self-managed homeowners associations, and
much, much more.
Click here to read full article:
http://www.hoaleader.com/public/HOA-Management-Companies-A-Practical-Guide-for-Homeowners-Association-Boards.cfm
=================================================================
Get your own copy!
Subscribe to the HOAleader.com Tip of the Week at:
http://www.hoaleader.com/public/department49.cfm
=================================================================
Please feel free to forward the *entire text* of this email to
others.
Copyright 2014, Plain-English Media, LLC
(866) 641-4548
http://www.hoaleader.com