Absentee homeowners are a fact of life in homeowners and condo associations. Snowbirds and vacation homes can be found all over the country, and so can deployed active duty military homeowners. Every day, brave men and women across the country, many of whom have their primary residence in an HOA or condo association, are sent away from their families and their homes. Deployment can make communication difficult–a problem that has generated a lot of bad press for HOAs over the years. Collecting from military homeowners–whether that’s late assessments, violation or late fines, and/or interest fees–can be a delicate process, so it’s important that your HOA do it the right way.
Knowing Your Rights–And Theirs
Active duty military homeowners might be absentee homeowners, but if they are, they’re absent for good cause. Even still, that doesn’t make the necessary HOA/homeowner interactions any less challenging. When it comes to communicating with and collecting from any kind of absentee homeowners, it’s important to reference not only your community documents, which should have processes spelled out on what can and cannot be done but also any legislation that may exist.
Normally, the FDCPA is the only federal law that a board needs to consider when it comes to collections (their individual state laws should be referenced as well). But for a community with active duty military service members, boards should familiarize themselves with the Servicemembers Civil Relief Act (SCRA). This act was created to protect active duty service members from issues that arise with collections and foreclosures, and it applies to homeowners associations.
While it doesn’t suspend things like collecting monthly assessments or imposing late fees or interest fines, it does set limitations on amounts and actions that can be taken when collecting from military homeowners.
It’s also important to keep in mind that the SCRA protects all active duty military members, and active duty does not necessarily mean deployed. Although a lot of the conversations surrounding collections and military homeowners talk about deployment, a military homeowner can be active duty while still living in the community. Any active duty military homeowner is entitled to all of the protections granted by the SCRA for the duration of their active duty status, and for one year following the conclusion of that status.
Collecting from Military Homeowners the Right Way
If your community is experiencing a delinquency issue with an active duty military homeowner, be sure to stay on top of the expectations and restrictions set forth by the SCRA. But more than that, keep in mind that even though the HOA or condo association is a business, compassion and communication can be vital (of course this is important not only when collecting from military homeowners, but when collecting from anyone).
- You cannot obtain a default judgement. In most situations of delinquency, an HOA or condo association has the ability to collect via foreclosure. The SCRA stops this in the case of active duty service members. Even if the HOA is unable to contact the homeowner about outstanding debts, the homeowner still retains their rights guaranteed by the SCRA. In the case of one family in Texas whose home was sold for approximately 1% of its appraisal value while the owner was deployed, the family successfully sued the association and regained ownership of the house, which undoubtedly incurred a mountain of debt (not to mention terrible publicity) for the HOA.
- Non-judicial foreclosure is not allowed. Even if you’re in a state that permits a non-judicial option for foreclosures, the SCRA requires that HOAs and condo associations seeking to foreclose on a delinquent property owned by an active duty service member use judicial foreclosure. Additionally, anyone who violates this rule knowingly is subject to fines and/or imprisonment. So in addition to financially harming their community, the trustees of the community association in the previous example (who foreclosed non-judicially) could have been fined and imprisoned for up to one year under the SCRA.
- Do not exceed the 6% interest rate cap. This one can bite a lot of communities if they aren’t paying close enough attention. In many states, there are set caps on interest rates for HOA and condo associations–sometimes as high as 12%. However, under the SCRA, active duty military are subject to a maximum of 6% interest, regardless of when the financial obligation began. So even if the delinquency began prior to the homeowner transitioning into active duty, the maximum interest rate that can be applied to the debt when collecting from military homeowners is 6%.
- Just because it’s legal doesn’t make it right. This is something that’s crucial to remember in every board/homeowner interaction, but it is especially important in cases of deployed homeowners. When a deployed military family’s home was occupied by squatters, their Florida HOA used the state’s Demand for Rent law to collect rent from the squatters as a means of settling past-due assessments from the rightful homeowners. The homeowners were never made aware and returned to find their home in shambles. Legally, the HOA was in the clear. And while we acknowledge the importance of maintaining community cash flow, this was not the way to handle this situation.
Rely on the Experts
Collections are complicated and have a history of making the collector look bad. When it comes to collecting from military homeowners, especially those who are active duty or deployed away from home, treading delicately is a must. At Axela Technologies, our team of collections experts has the knowledge and skills to collect ethically and legally, even when collecting from military homeowners. Call us today for your no-cost, no-risk assessment and consultation.