Condo Media - July 2018 - 32

is structured in a way that secures the
association's statutory collection rights.
That means, among other things, filing
a lien in accordance with the applicable
state statute, and keeping the lien in
place until the delinquency has been
resolved. "You can follow the statute [in
pursuing delinquent owners] and still
strike a deal with them," Moriarty says.
Others echo that central point. "Payment plans are fine," Daddario says, "as
long as they are drafted in a way that protects the association. You want to ensure
that the association isn't in a worse position for having offered an owner this [option]." The payment plan, he emphasizes,
should "cover all the bases." Among other
details, he suggests, the plan should:
n Require the owner to acknowledge the
balance due;
n Specify that the owner will be responsible "for all legal fees related to the
collection" and for any additional fees
resulting from enforcement of the
agreement; and
n Make it clear that if the owner breaches
the agreement, the association's collection process will resume. It won't start
over from the beginning with another
round of delinquency notices and collection warnings.
McGlauflin similarly encourages his
Maine association clients to consider
payment plans with delinquent owners and to deal with them sensitively.
"Boards have the authority to sue owners
to collect delinquent payments," he
notes, "and they also have the authority
to exercise discretion in how they use
those powers." A few other points about
payment plans on which industry executives generally agree:
n They should be offered only to owners
who need temporary relief and who
have a reasonable likelihood of repaying
the delinquency and remaining current.

n The plans should be approved by the
board, not negotiated by individual
board members. McGlauflin advises
boards to have a formal vote to approve any compromise or payment
plan they negotiate, and to explain in
their minutes the rationale for that
decision "so that future boards will
know to exercise similar discretion
with owners in similar circumstances."
n Adopt a board policy that authorizes
only the manager (if there is one), a
designated board member, or the attorney (if the matter has been referred
for collection) to deal with delinquent
owners. Board members who try
to negotiate an agreement with the
owner directly might not be aware of
all the legal fees and other costs accrued to that point, and so could end
up collecting less than the association
is owed.
n Document all communications with
the owner; everything should be in
writing. You want to avoid situations
(and they are not uncommon) when
the owner says that he/she "spoke
with someone on the board-I don't
remember who it was-but that person told me not to worry about falling
a little behind. I could just plan to
catch up sometime next year."
The strict and aggressive collection
policies industry professionals advise
can seem harsh. There is no question
that demanding payment from your
neighbors can be awkward, to say the
least. But failing to collect the revenue
needed to cover the association's essential expenses will be a lot more than
awkward. It will be unfair to other owners who have to make up for delinquent
payments, and potentially fatal for
associations that aren't run like the businesses they have to be.
n NENA GROSKIND IS PRESIDENT
OF ECONTENTPLUS, PROVIDING
EDITORIAL CONTENT FOR

n The plans should be offered on the
same terms to all delinquent owners.

CONDOMEDIA July 2018

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