HOAleader.com - Tip of the Week - March 22, 2019
Published: Fri, 03/22/19
=================================================================
Be Sure Your Condo/HOA Debt Collection Doesn’t Cost Rather Than Earn You Money
=================================================================
In this week’s tip, we ask if you’ve given your debt-collection practices a once over recently.
You should, because you’re at risk—it’s small, we admit, but it does exist—of being sued as part of a class action for violations of the Fair Debt Collection Practices Act.
The FDCPA is a federal law that restricts what debt collectors can do when dealing with consumers. But it’s limited to consumer debt, such as credit card debt, and it applies only to third parties collecting debt on behalf of another entity.
The confusion over it can arise over the fact that it applies to the collection of condo and HOA assessments only when they’re being sought by a debt collector. But it doesn’t apply when they’re being sought by the community association or a management company acting on its behalf, since neither meet the statute’s definition of a debt collector.
And what about fines? Are they debts under the act? “They may or may not be,” according to Travis Campbell, a lawyer at Simmonds & Narita in San Francisco, recently speaking to community association lawyers. “Courts have gone different ways on this. Some said, yes, fines are debts. The reasoning behind that is that the fine emanates from the contract the owner and HOA entered into. This is a consumer transaction.
“Other courts compare fines to other contexts, like parking tickets, traffic fines, and penalties on taxes, that arise out of the failure to do something the debtor is legally obligated to do,” adds Campbell. “In those cases, courts have found they’re not a debt.”
Cambell’s colleague, Tomio B. Narita of the same firm, adds, “There’s very little case law on this issue, so it’s open season as to how local jurisdictions are going to resolve this issue.”
The worry among community association lawyers is that in addition to the FDCPA, state laws also govern debt collection. “In some states, it’s nearly impossible to comply with both state law and the FDCPA,” says Campbell.
“The risk of getting hit with a class action lawsuit over the FCCPA is smaller for associations, but for legal practitioners in the community association world, the risk can be a scary monster,” says Todd J. Billy, an attorney at The Community Association Lawyers in St. Louis, who’s licensed in Missouri and Illinois and has more than 1,000 active condo and HOA clients.
As an association, you don’t want a lawyer who makes a mistake to trip you, the client, into a class action lawsuit. “The best tool for condos and HOAs is to talk to their insurance professional,” advises Billy. “They’d likely have insurance coverage if they were hit with such a lawsuit. That goes the same for the management company and law firms. That’s the only way to manage the risk without having a cardiologist on staff.”
Since community associations’ debt collection practices don’t typically fall under the FDCPA, your risk for getting hit with a violation, and then a class action, is low. That doesn’t mean you shouldn’t be careful in your debt collection.
Read our experts’ tips for doing just that in our new article:
https://www.hoaleader.com/members/3883.cfm
Best regards,
Matt Humphrey
President
=================================================================
Upcoming Event -- NEXT WEEK!
Prevent Embezzlement & Theft at Your HOA or Condo:
Steps to Take Today to Protect Your Money
Thursday, March 28, 2019 -- THIS THURSDAY!
2:00 p.m. Eastern
An Exclusive HOAleader.com Webinar
With Practical Tips for Condo and HOA Boards
Learn more or register now:
https://www.hoaleader.com/products/fight-fraud-theft-hoa-a.cfm
Members save $30!
=================================================================
Recent articles posted at HOAleader.com:
=================================================================
Condo/HOA Debt Collection Class Action Lawsuit Are Rare, But You Should Still Have Good Procedures
Are you at risk of being sued as part of a class action for violations of the FDCPA? It's unlikely, but it's possible your lawyer could be hit with such a claim while doing collections on your behalf if their collections practices violate the Fair Debt Collection Practices Act. Here, we explain the risk and the practices that could put your association at risk for a lawsuit over your collection practices.
Click here to read full article:
https://www.hoaleader.com/members/CondoHOA-Debt-Collection-Class-Action-Lawsuit-Are-Rare-But-You-Should-Still-Have-Good-Procedures.cfm
=================================================================
Bad Behavior That Could Lead to Your Condo/HOA Lawyer Telling You to Take a Hike
In this week's tip, we warn you about bad board behavior that can push your lawyer to the brink. "I think as counsel, and I think some of my colleagues would agree, that we have trouble breaking off a relationship with an association client," explains Matt D. Ober, senior partner at Richardson Harman Ober, a Pasadena, Calif., law firm with a significant community association practice. We believe they need us, and even though they may be struggling financially or in terms of governing, you don't want to terminate the relationship with the client.
Click here to read full article:
https://www.hoaleader.com/public/Bad-Behavior-That-Could-Lead-Your-CondoHOA-Lawyer-Telling-You-Take-Hike.cfm
================================================================
8 Ways to Get Your Lawyer to Fire Your Condo/HOA
You know, you're not the only one with choices when it comes to your relationship with your community association lawyer. "I think as counsel, and I think some of my colleagues would agree, that we have trouble breaking off a relationship with an association client," explains Matt D. Ober, senior partner at Richardson Harman Ober, a Pasadena, Calif., law firm with a significant community association practice. We believe they need us, and even though they may be struggling financially or in terms of governing, you don't want to terminate the relationship with the client.
Click here to read full article:
https://www.hoaleader.com/members/8-Ways-Get-Your-Lawyer-Fire-Your-Condo-HOA.cfm
================================================================
Special Report Download -- Brand-new!
Condo and HOA Financials:
How to Report, Manage, and Protect Your Association's Money
This report is another tool to help you more effectively oversee the finances underpinning all of your operations. We've sought the advice of legal and management experts nationwide to compile this comprehensive report on the best practices for handling financial reporting and management at your association.
Click here to read full article:
https://www.hoaleader.com/public/Condo-HOA-Financials-How-Report-Manage-Protect-Your-Associations-Money.cfm
=================================================================
Get your own copy!
Subscribe to the HOAleader.com Tip of the Week at:
https://www.hoaleader.com/public/department49.cfm
=================================================================
Please feel free to forward the *entire text* of this email to others.
Copyright 2019, Plain-English Media, LLC
(866) 641-4548
https://www.hoaleader.com