Hardball HOA assessment collection tactics questioned
Arizona homeowners associations are not accepting a resident's foreclosure as an excuse when it comes to collecting unpaid dues, assessments and fines.
Already forced to raise member dues and cut services to cope with unprecedented delinquency rates, HOAs also are turning to skip traces, collection agencies, process servers and out-of-state attorneys to collect what is owed.
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George Staropoli is quoted, taking issue with selective collection methods and excessive collection costs.
9 comments:
Is it really the HOA corporation, or is it really the agents of the HOA corporation under the pretext of representing the HOA corporation?
It should be pointed out that CAI is opposed to application of the Fair Debt Collection Practices Act to their members. Indeed, the organization has adopted their opposition as one of their Public Policies. Perhaps this reflects on the true nature of CAI.
"It should be pointed out that CAI is opposed to application of the Fair Debt Collection Practices Act to their members. Indeed, the organization has adopted their opposition as one of their Public Policies. Perhaps this reflects on the true nature of CAI."
I've heard this before, but never seen a source cited.
Could you please point to the CAI materials that call for exemption from the FDCPA (link is to PDF)?
Shu mentioned on one of the episodes of "On The Commons" that HOA law is so slanted in favor of the HOA corporations that FDCPA cases are generally the only ones that homeowners can win.
Thanks.
What’s good for the goose must be good for the gander… equity: fairness, justice and impartiality.
“…as with any business, HOAs have to decide which debts are worth pursuing and which ones are lost causes (Penny Koepke, Ekmark & Ekmark LLC)… HOA managers and their critics agree that the system is inequitable,” evidences an acute misunderstanding of the law in Arizona, Johnson v. The Pointe Community Association, Inc., 205 Ariz. 485, 73 P.3d 616 (2003).
The Court of Appeals in Johnson v. The Pointe Community Association, Inc., 205 Ariz. 485, 73 P.3d 616 (2003), held that a board of directors had an affirmative fiduciary duty to enforce the association’s restrictive covenants.
The court rejected The Pointe’s argument that its decision not to enforce the restrictive covenants of the Declaration was entitled to deference, holding that The Pointe did not have any discretion not to enforce the restrictive covenants.
The court held “In interpreting the meaning of a [restrictive] covenant, the superior court does not defer to the interpretation given by the association…,” The Pointe must comply with the declaration’s requirements…the court also cautioned that “Because of its considerable power in managing and regulating a common interest development, the governing board of an owners association must guard against the potential for the abuse of that power.”
‘Does the recent case Johnson v. Pointe Community Association, Inc. require associations to enforce every restriction in CC&Rs?’ – “…a Board’s decision not to enforce a community’s restrictions may be subject to challenge by other owners in the community…homeowner (sic) filed suit against the Association for breach of contract, breach of fiduciary duty, declaratory, injunctive and equitable relief…the trial court ruled in favor of the Association holding that public policy dictated that the courts defer to the Association’s decisions ‘so long as they were made in good faith’ the Association’s decisions were entitled to deference when enforcing it own restrictions.
The Court of Appeals reversed the trial court decision…the Board, exercising its discretion, should not receive complete deference by the courts…Board’s decisions are not entitled to any deference if the Board fails to follow the express language of the CC&Rs…the Board must follow the language of the CC&Rs…the Board cannot alter its decision or refrain from acting to enforce an express provisions…puts the board at risk of a breach of contract claim and a violation of the Board members’ fiduciary obligations.” J. Roger Wood, Carpenter Hazlewood, PLC: September 2003
What’s good for the goose must be good for the gander… equity: fairness, justice and impartiality.
“…as with any business, HOAs have to decide which debts are worth pursuing and which ones are lost causes (Penny Koepke, Ekmark & Ekmark LLC)… HOA managers and their critics agree that the system is inequitable,” evidences an acute misunderstanding of the law in Arizona, Johnson v. The Pointe Community Association, Inc., 205 Ariz. 485, 73 P.3d 616 (2003).
The Court of Appeals in Johnson v. The Pointe Community Association, Inc., 205 Ariz. 485, 73 P.3d 616 (2003), held that a board of directors had an affirmative fiduciary duty to enforce the association’s restrictive covenants.
The court rejected The Pointe’s argument that its decision not to enforce the restrictive covenants of the Declaration was entitled to deference, holding that The Pointe did not have any discretion not to enforce the restrictive covenants.
The court held “In interpreting the meaning of a [restrictive] covenant, the superior court does not defer to the interpretation given by the association…,” The Pointe must comply with the declaration’s requirements…the court also cautioned that “Because of its considerable power in managing and regulating a common interest development, the governing board of an owners association must guard against the potential for the abuse of that power.”
‘Does the recent case Johnson v. Pointe Community Association, Inc. require associations to enforce every restriction in CC&Rs?’ – “…a Board’s decision not to enforce a community’s restrictions may be subject to challenge by other owners in the community…homeowner (sic) filed suit against the Association for breach of contract, breach of fiduciary duty, declaratory, injunctive and equitable relief…the trial court ruled in favor of the Association holding that public policy dictated that the courts defer to the Association’s decisions ‘so long as they were made in good faith’ the Association’s decisions were entitled to deference when enforcing it own restrictions.
The Court of Appeals reversed the trial court decision…the Board, exercising its discretion, should not receive complete deference by the courts…Board’s decisions are not entitled to any deference if the Board fails to follow the express language of the CC&Rs…the Board must follow the language of the CC&Rs…the Board cannot alter its decision or refrain from acting to enforce an express provisions…puts the board at risk of a breach of contract claim and a violation of the Board members’ fiduciary obligations.” J. Roger Wood, Carpenter Hazlewood, PLC: September 2003
CAI's position is that they support litigation to establish that HOA/condo fees are not "consumer debt" within the meaning of the FDCPA. It is on page 4 of their publication called "Public Policies." The ISBN is 0-941301-56-7. Is that specific enough for you?
CAI Public Policies
http://www.caionline.org/govt/policies/Pages/default.aspx
FAIR DEBT COLLECTION PRACTICES ACT
Policy
Community Associations Institute (CAI) supports taking legislative, regulatory or judicial action to establish that community association assessments are not “consumer debt” as defined by the Fair Debt Collection Practices Act or similar state statutes in circuits that have not already defined them as such but also acknowledge that they are considered “consumer debt” and should act accordingly.
The Fair Debt Collection Practices Act (FDCPA) was enacted in 1979 to deter unscrupulous creditors from using harassment techniques to recover debt. The Act proscribes the type of activities debt collectors may undertake and requires certain disclosures to consumers. Compliance by community association practitioners has been mostly voluntary in the past, though recently many circuit courts have found that community association assessments do indeed fall under the FDCPA definition of debt, therefore making compliance necessary.
It is imperative those attorneys, management companies and others recognize this new trend and that precautions be taken to prevent violating the act in circuits that have ruled that community association assessments do indeed fall into the category of consumer debt. The courts have held in several cases that the association fees satisfied the “personal, family or household” requirement of a debt under the FDCPA.
These circuits include the 4th, 7th, 9th and 10th, which encompass the following states: Maryland, Arizona, Virginia, Illinois, Indiana, Wisconsin, California, Utah, Wyoming, Colorado, New Mexico, Kansas and Oklahoma. Thus, individuals who collect assessments on behalf of homeowner associations in the affected states are considered debt collectors for purposes of compliance with the Act. The penalties for violation can often be punitive in nature. There are community associations that are not located in these circuits that may be affected in the future.
To combat such rulings, it is necessary to restore consensus that community association assessments do not fall within the FDCPA’s definition of debt.
Approved by the Public Policy Committee, April 22, 1998
Approved by the Public Affairs Council, April 22, 1998
Approved by the Board of Trustees, April 25, 1998
Amended and Approved by the Government & Public Affairs Committee, October 17, 2001
Approved by the Board of Trustees, May 3, 2002
Yes, that is very specific, and I found it.
Thank you.
FAIR DEBT COLLECTION PRACTICES ACT
CAI supports legislative, regulatory or judicial actions to establish that community association assessments are not “consumer debt” as defined by the Fair Debt Collection Practices Act or similar state statutes.
Public Policies
Community Associations Institute
2005
ISBN: 0-941301-56-7
p. 4
PDF copy available at www.caisecure.net/public_policies.pdf
They also have a "Public Policies" web page at www.caionline.org/govt/policies/Pages/default.aspx
From there, is a link to the 2010 version, at www.caionline.org/govt/policies/Documents/public_policies.pdf
Page 4 still states that
FAIR DEBT COLLECTION PRACTICES ACT
CAI supports legislative, regulatory or judicial actions to establish that community association assessments are not “consumer debt” as defined by the Fair Debt Collection Practices Act or similar state statutes.
and page 29 states:
FAIR DEBT COLLECTION PRACTICES ACT
Policy
Community Associations Institute (CAI) supports taking legislative, regulatory or judicial action to establish that community association assessments are not “consumer debt” as defined by the Fair Debt Collection Practices Act or similar state statutes in circuits that have not already defined them as such but also acknowledge that they are considered “consumer debt” and should act accordingly.
Background
The Fair Debt Collection Practices Act (FDCPA) was enacted in 1979 to deter unscrupulous creditors from using harassment techniques to recover debt. The Act proscribes the type of activities debt collectors may undertake and requires certain disclosures to consumers. Compliance by community association practitioners has been mostly voluntary in the past, though recently many circuit courts have found that community association assessments do indeed fall under the FDCPA definition of debt, therefore making compliance necessary.
It is imperative those attorneys, management companies and others recognize this new trend and that precautions be taken to prevent violating the act in circuits that have ruled that community association assessments do indeed fall into the category of consumer debt. The courts have held in several cases that the association fees satisfied the “personal, family or household” requirement of a debt under the FDCPA.
These circuits include the 4th, 7th, 9th and 10th, which encompass the following states: Maryland, Arizona, Virginia, Illinois, Indiana, Wisconsin, California, Utah, Wyoming, Colorado, New Mexico, Kansas and Oklahoma. Thus, individuals who collect assessments on behalf of homeowner associations in the affected states are considered debt collectors for purposes of compliance with the Act. The penalties for violation can often be punitive in nature. There are community associations that are not located in these circuits that may be affected in the future.
To combat such rulings, it is necessary to restore consensus that community association assessments do not fall within the FDCPA’s definition of debt.
Approved by the Public Policy Committee, April 22, 1998
Approved by the Public Affairs Council, April 22, 1998
Approved by the Board of Trustees, April 25, 1998
Amended and Approved by the Government & Public Affairs Committee, October 17, 2001
Approved by the Board of Trustees, May 3, 2002
Public Policies
Community Associations Institute
2010
ISBN: 0-941301-56-7
Here is a link to CAI's Public Policies set forth as individual policies. Policies may be stated in equivocal terms:
Public Policies
We must all remember that historicaly housing associations grew in large numbers while not going backrupt before they had forclosure powers.
The forclosure powers were lobbyed and authored by the industry. To primaray benefit the service providers both to gain more control over members and as a new lucrative income source by masquerading it's need to protect the HOA.
...a lawyer's fee tacked on to the outstanding dues far exceeds the original debt as George S. stated is who realy benefits from the authority and not the HOA. This is also why CAI dosen't want to be under the authority of FDCPA because then they can't profit without limits.
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