18 / 72
18
M A Y , 2 0 1 7
A
s community associations continue to grapple with
the ongoing struggle of collecting past due amounts
owed on owner accounts, the question of when
and how to resort to association counsel continues to loom
over boards and managers. After all, while the fees and
costs incurred during the collection process are assessed
to owner accounts, the reality is that associations do not
always recoup all of those charges – some or all of which
must ultimately be written off
as bad debt. Those loss-
es are then absorbed
by the remaining
owners by way
of increased
as ses smen t s
or by adjust-
ments to an association’s budget. So the question is: when
does it pay to resort to counsel and pursue account arrear-
ages and when should an association cut its losses and/or
take matters into its own hands to collect?
At the outset, one of the easiest and most valuable,
cost-effective contributions counsel can make is to assist
the association in drafting and adopting a resolution
setting forth a clear and concise collection policy. This
policy should include specific timelines for when and at
what point unpaid accounts will be sent to counsel (and
thus incurring additional fees), how communications with
delinquent owners will be handled and how payments will
be applied to the remaining unpaid balances. Having a
clear, stated policy in place will provide consistency to the
current board as well as to future boards and will place the
owners on notice as to what additional charges may be
incurred as a result of missed or delayed payments. Once
adopted, the policy should be effectively communicated to
all owners (and provided with other relevant information
to new owners upon taking title to a unit) so that they are
aware of their responsibilities going forward.
One key element of a successful collection practice is
the referral of unpaid accounts to legal counsel as early in
the process as is practicable. Delaying the referral of an
account can render it more difficult for the association to
collect, which is also likely to reduce the options available
to recoup the unpaid balance without expending addi-
tional (and sometimes uncollectable) legal fees. An early
referral will allow counsel to consider a greater number
and variety of collection actions and leave an association
with options to take action before other intervening
events, such as a bankruptcy filing or a mort-
gage foreclosure. Every collection
matter varies in scope and nature.
GETTING THE MOST BANG FOR YOUR BUCK:
Efficiently and Effectively Using Association
Legal Counsel in the Collection Process
By Loren Rosenberg Lightman, Esq.
Hill Wallack LLP
CONT I NU E S ON PAGE 20
© iStockphoto.com