Monday, December 05, 2011

HOA suing family for forgetting $120 fee

BOCA RATON, FL (WFLX) It may not sound like a lot of money, but an unpaid $120 bill could force a Boca Raton family out of their home.

Asher Essebag has lived in a Boca Del Mar home for 12 years with his family, but by next month they could be forced out. He's up to date on his mortgage, but Essebag and his family are haunted by a Homeowners' Association fee he forgot to pay earlier this year.

"Next thing I know, I have a police officer at my door serving me with a summons," said Essebag.

The summons read that if the fee isn't paid to the Boca Del Mar Improvement Association, he'll be foreclosed on. Essebag didn't think that would be a problem, since the fee was just $120. But it grew over time to twenty times more. Now that the Association is suing to collect the bill, it skyrocketed to $2400 to include legal fees.
Welcome to Privatopia...where the legal fees come first.


Anonymous said...

Since HOAs are very local and small, participants are often neighbors and hence have incentive to settle disagreements in a civil manner.

-Brian Schwartz
"Free-Market Alternatives to Zoning"
The Independence Institute
February 28, 2009

As a Managing Shareholder of Katzman Garfinkel & Berger (KG&B), I have witnessed the dramatic effect that the downturn in the economy has dealt many communities here in South Florida and across the state.. . .

History has taught us, however, that there are always those who survive and even thrive in tough times! My team of community association attorneys and I started to ask ourselves: What should communities be thinking about right now in terms of saving money, recouping lost money and even making money?. . .

Rethink your traditional collection policy in light of today’s economic realities. . .

Be aggressive with your foreclosure actions.

-Donna Berger, Esq
Community Advocacy Network
"Time To Tighten Up Your Collection Policy"
April 01, 2010. (emphasis added)

The first thing you want to do is to make sure that your governing documents provide you with all the right tools to deal with your foreclosure and other issues....

Adding late fees (if you don’t already have them) and increasing the amounts you can charge for late fees and interest to the “highest amount permitted by law”....

Add an acceleration of payments clause in the event installments are not timely paid. This gives the association a larger hammer to collect for the whole year which obviously benefits cash flow.

-Donna Berger, Esq.
Community Advocacy Network
"Spend $$'s To Recoup More $$'s"
April 02, 2010. (emphasis added)

Our goal is to move assessments to the top of the priority list and to impress upon owners that paying assessments is critical to keeping their home....

We have developed successful alternatives when traditional collection methods fail, including the use of foreclosures and receiverships. By taking a proactive, aggressive approach, your association can quickly recover the assessments you are owed....

Colorado has one of the highest foreclosure rates in the nation. HOALiensFor Sale is a service we offer which will benefit your association and its bottom line.

"Collections/Foreclosures" (emphasis added)

What's really driving this is the dynamics of these collection lawyers who are just out to generate fees and to sell these houses off as fast as they can.

-Evan McKenzie (former H.O.A. lawyer and author of Beyond Privatopia)
"Do Homeowners Associations Go Too Far?"
ABC 20/20
April 20, 2002

The worst part about the whole process, says McKenzie, it that it's legal, a fully institutionalized practice: "The bar even offers workshops on the process."

-"Carol Lloyd"
The Myth of Privatopia"
December 17, 2002

Fred Fischer said...

Why do owners who live in CIDs have the right to foreclose on each other ?

In other words why have HOAs who are also the owners been granted lenders foreclosure rights when neither provided any funds to purchase each other’s properties nor can ever extinguish the assessment debt ?

Anonymous said...


Professor McKenzie answered that question at (scroll down to his comment at April 5, 2010 10:29:00 PM CDT ) (direct link to comment)

An HOA or condo association isn't just "any creditor." They are secured creditors, meaning that your obligation to pay them is secured by an interest in your property. They have a security interest in your property, just like your bank has a mortgage, which is a security interest in your property. You don't pay, they get the property, to the extent of the unpaid secured debt.

How did your association get that security interest? In your CC&Rs, you agreed to give that security interest to the association. You may not like that, but that's the way the law sees it. It's in the document. Just like the bank's foreclosure rights are in the note and the mortgage, and that right is also on the deed (just as we often call your CC&Rs "deed restrictions")--same idea.

But your credit card company and the hospital are unsecured creditors. If you don't pay, they have to get a judgment against you and then execute it by seizing your assets (bank accounts, wages, baseball card collection, etc.), which is hard and often not very productive. They don't have any existing interest in your property that they can quickly and easily foreclose on to satisfy the debt.

The reason associations get this treatment? Two reasons: one is the contract, and the other is state statutes that authorize these lien rights and establish the priority of the various liens--first mortgages and later ones, taxes, association assessments, bills owed to others, etc.

The idea is that if Wells Fargo Credit Card Services loses some money, they are a big corporation that can chase down creditors, fight with them, sell the debt to a collection agency, write off the loss, and generally make it part of their business. But if your HOA doesn't get paid, the rest of the neighbors have to pay it, and that can start everybody down a slippery slope. And nobody expects your HOA or condo association, run by volunteers with day jobs, to chase down the assets of everybody who doesn't pay their assessments.

That's the explanation--you may not like it, but there it is.

See also his blog posts at "The plain truth about HOA foreclosures..." on Friday, March 12, 2004 at at 6:48 AM "More on foreclosure" on Saturday, March 13, 2004 at 7:46 AM "Slimewatch" on Thursday, March 25, 2004 at 10:21 AM