Excuses, Excuses, Excuses!
If you’ve been in the business long enough (and long enough is a week), you’ve heard plenty of excuses! Association members who pay their assessments late or not at all come up with some very interesting excuses. Here are a few of the most common and what you should know to rebut them.
- “I didn’t get what I paid for.” “My building hasn’t been painted in five years! I’m not paying another cent until some basic maintenance gets done.” “Snow removal didn’t happen to my standards. I’m withholding a prorated amount from my assessment check.”
You’ve heard those, or something similar, right? Of course you have! Owners DO have a right to require the association to perform its duties, and there are various legal channels that exist to accomplish this. BUT, withholding assessments is not one of them. The obligation for the association to maintain the association and the obligation for the owner to pay its assessments are independent covenants, meaning that an owner’s obligation to pay the assessments has nothing to do with the association’s obligation to provide maintenance and service.
- “You didn’t bill me.” “I didn’t get an invoice.” “You didn’t tell me I was behind on my payments.” “I never got notice.”
It may surprise you that many association governing documents do not require the association to send invoices. Colorado law DOES require that an association provide a delinquent owner with at least one notification that provides the following:
- The total balance due, with an accounting of how the total past due balance is determined;
- Whether or not the opportunity for a payment plan exists and instructions for contacting the association to enter into said plan should they desire to do so;
- The name and contact information for the individual the owner may contact to request a copy of the owner’s ledger to verify the amount of the debt; and
- A statement stating what action is required to cure the delinquency and that failure to do so within 30 days may result in the account being turned over to a collection agency, a lawsuit being filed against the owner, the filing and foreclosure of a lien against the owner’s property, and other remedies available under Colorado law.
Associations are also required to send the approved budget to each owner annually. So, there should be no doubt from owners what assessments are due and when.
- “You can’t do that!” “These people have no right to make me pay for the neighborhood upkeep.” “If they think I’m paying those outrageous late fees and interest, they’re crazy.”
An association not only has the authority, it has a DUTY to all owners to collect assessments. This authority is provided for in both state law (the Colorado Common Interest Ownership Act, or CCIOA) and the association’s governing documents. Owners, when they purchase in a community association, agree to abide by those documents (often times never even reading them) – and that includes paying assessments, both regular, and special assessments, should they arise.
- “But I don’t even use the recreational facilities.” “I don’t play golf. I shouldn’t have to pay to maintain the course.” “I’ve never seen the inside of the recreation center, and I don’t plan to ever use it. Why can’t you prorate my assessments?”
Admittedly, recreational facilities are expensive to operate and – for some associations – represent a good portion of the budget. Nevertheless, most declarations specify that even if you don’t use the amenities, you are still obligated to pay for their upkeep. Even if the owner is not using the amenities, he/she is still benefitting from them – they make the community more desirable and the homes in the community more valuable!
- “I paid in full.”
What if you receive a check that says “paid in full” in the memo section – but it isn’t? What if the check comes with a letter that states that the payment represents “payment in full” or asserts to cover all charges through a certain date, but it doesn’t? These statements are called restrictive endorsements. DON’T ACCEPT THE CHECK. If there is still an outstanding balance on the account and you do cash the check, you could be effectively stating that the owner is, in fact, paid in full. Return the check to the owner explaining the situation. They may not be aware of late fees and interest that have been incurred (honest mistake) or they may be trying to pull a fast one in order to get out of paying late fees and interest. Either way, play it safe.
If you have questions about collecting assessments, or just how to communicate with owners regarding the topic, please contact us at email@example.com or at 720.279.4351.