HOAleader.com - Tip of the Week - May 27, 2016
Published: Fri, 05/27/16
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Owner Disputes HOA’s 15-Year-Old Debt. Does He Have a Point?
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We’re helping out a reader in this week’s tip. Paraphrased, our reader’s
beef goes like this: “Hey, my board just passed a special assessment for a
15-year-old loan I never knew about. I call baloney!”
Our experts offer a range of opinions on this issue, from never having seen it
to saying it happens all too frequently.
“I don’t know about not having to pay this debt off,” states Susan Hawks
McClintic, co-managing shareholder and the chair of the community
association transactional practice group at the law firm of Epsten
Grinnell & Howell in San Diego. “But the whole thing raised my eyebrows. I
have a lot of questions about how this could have happened in the first place.
It doesn’t make any sense.
“We have a lot of clients that get loans, and that’s a process,” she explains.
“Loan documents have to be signed, and there’s a set time for paying off the
loan. It doesn’t make sense to me how it got to that point and what in the world
loan documents or note could supposedly establish this debt. If it’s a
legitimate debt, the association has to pay it off; it has no choice. But you
have to review the documents to see what the real story is here.”
In the middle on this issue is Gregory S. Cagle, a partner at Savrick Schumann
Johnson McGarr Kaminski & Shirley in Austin, Texas, and author of Texas
Homeowners Association Law. He can envision several scenarios that would
result in a special assessment for a 15-year-old debt.
“Without knowing more detail, I guess there are multiple ways of
interpreting that situation,” he says. “My guess is that it’s a loan that’s
been in existence for 15 years. It’s either an interest-only loan with a
balloon payment, which wouldn’t surprise me, or it’s a loan that had an
original payoff period that exceeded 15 years, and the board wants to go
ahead and pay it off now rather than over another five or 10 years, or whatever
is the length of that original note.”
On the other end of the spectrum is Ben Solomon, an attorney and founder of the
Association Law Group in Miami, who advises more than 500 associations and
represents developers through his second law firm, Solomon & Furshman LLP.
“This happens all the time,” he says.
“For condos in Florida, there’s a disclosure called the frequently asked
questions and answers,” adds Solomon. “One of the questions is: Is there a
special assessment pending, or is one contemplated? Even if the answer is
no, that doesn’t mean one’s not coming down the pike in a few months that
doesn’t need to be disclosed. Buyers have to find out from management or the
seller whether there’s a special.
“But it can happen any time,” stresses Solomon. “The fact that the debt is 15
years old is no different than the need for a new capital expense tomorrow.
The fact that it’s old doesn’t really matter. If it’s a liability of the
association and the board decides that’s how they’re going to pay it, you’re
subject to it. That special assessment should have gotten detected by
inquiring about whether there’s any debt of the association or anticipated
special assessments. But is this special assessment fair, legal, and
equitable? Absolutely.”
A board in this situation has a few options if it doesn’t want to smack owners
with a big special assessment. Read more in our new article:
http://www.hoaleader.com/members/1374.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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Is This HOA's Special Assessment Necessary? Or Wise?
An HOAleader.com reader asks, "Just moved into small (40-member) condo
association in [New York state]. Just received notice of a special
assessment to pay off an outstanding loan of 15 years ago. [I] had no idea
[the] loan existed. [Am I] required to pay off something that happened 15
years ago?"
Here our experts explain if an HOA could really be required to pay a
15-year-old debt and if a special assessment is the right way to proceed.
Click here to read full article:
http://www.hoaleader.com/members/This-HOAs-Special-Assessment-Necessary-Or-Wise.cfm
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Smart Rules for Your HOA's Clubhouse
If you rent out your clubhouse or other facility--or even if you just let
owners use it for free for get-togethers--you should provide guidance on
what's OK and what's not. Here our experts provide a road map you can use to
create rules tailored to your HOA.
Click here to read full article:
http://www.hoaleader.com/members/Smart-Rules-for-Your-HOAs-Clubhouse.cfm
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What You Need to Know to Effectively Regulate Parking in Your HOA
One owner runs a small roofing business and parks her oversized commercial
truck--complete with the company's name and phone number stenciled on the
doors and ladders attached to the sides--in her driveway.
Another owner has a beautiful 26-foot boat parked in front of his house.
Then there's the owner who has so many guests that others complain there's
never anywhere for their guests to park.
What a pain parking issues can be!
Perhaps it's time to ease the pain for everybody in your community by
regulating parking in a sensible way. We can show you how.
Watch this exclusive, on-demand webinar now.
Click here to read full article:
http://www.hoaleader.com/products/regulate-parking-in-your-hoa-b.cfm
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Know How to Avoid Lawsuits Over HOA Collection Tactics
In this week's tip, we double back and cover what you need to know about the
Fair Debt Collection Practices Act. We at HOAleader.com talk about it a lot.
It's actually a pretty complicated law that many people don't fully
understand.
Click here to read full article:
http://www.hoaleader.com/public/Know-How-Avoid-Lawsuits-Over-HOA-Collection-Tactics.cfm
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What HOA Board Members Need to Know About the FDCPA
We at HOAleader.com talk about the Fair Debt Collection Practices Act a lot.
It's actually a pretty complicated law that many people don't fully
understand.
"It's a gigantic issue for us," states Susan Hawks McClintic, co-managing
shareholder and the chair of the community association transactional
practice group at the law firm of Epsten Grinnell & Howell in San Diego. "Part
of the problem is that I don't think everybody, even attorneys, understands
the ins and outs of it. So it's so easy to make a mistake."
Click here to read full article:
http://www.hoaleader.com/members/What-HOA-Board-Members-Need-Know-About-FDCPA.cfm
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