Follow procedures for collecting HOA fees

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Your HOA may be required to follow the Fair Debt Collection Practices Act.

As a member of your homeowners association (HOA) board, it’s your responsibility to collect monthly dues or assessments to maintain your community. Whether board members take on this task or you delegate it to a bookkeeper or property manager, there are procedures that must be followed in collecting this debt.

While you may not consider your HOA monthly dues as debt, many state and federal courts do. Which means your HOA’s collection of these fees falls under the federal Fair Debt Collection Practices Act (FDCPA). Even if your area doesn’t consider HOA fees as debt, it’s a good idea to follow these practices.

To collect past-due fees or special assessments, the FDCPA requires the party attempting to collect the debt (the HOA) to notify the debtor (the homeowner) of the debt in writing. The letter must include certain information, including the purpose the letter (an attempt to collect the debt), the amount of the debt and the name of the organization owed the debt (the HOA).

The FDCPA also prohibits certain tactics to obtain payment, including:

  • Threatening violence, or harassing the debtor<
  • Depositing a post-dated check prior to that date
  • Attempting to contact the debtor at their place of employment or at a time or place known to be inconvenient
  • Threatening legal action with no intention of following that course of action
  • Sharing the debtor’s information without authorization

This is just a partial list of the procedures that must be followed under the FDCPA. To view the full act, visit the Federal Trade Commission’s Bureau of Consumer Protection.

This article contains general information. Individual financial situations are unique; please, consult your financial advisor or tax attorney before utilizing any of the information contained in this article.

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Source: Community Association Management, Condo & HOA Smart, Federal Trade Commission
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