Condo & HOA Collections: Why Lawyers Are Not The Solution.

Condo & HOA Collections are specialized so community association lawyers are naturally the best solution… right? Well it ain’t necessarily so. Community Association Attorneys are often focused on other serious matters from condo defects to changing governing documents. Frivolous matters such as slander are on their agenda, because board members will often say things and offense is taken. Once offense taken the lawyer is called. Community Association Lawyers often do not have the tools to cure delinquencies beyond litigation. Such tools as skip-tracing, outbound call centers, credit bureau reporting, and most important the personal touch to collect debt. Condo & HOA Collections require specialists and in these matters the licensed and regulated specialists are collection agencies.

During the real estate meltdown various collections companies that specialized in community association collections came to the forefront.  Many understood the challenge and offered merit based services. This way a community with delinquencies would not be further burdened by the expense of collections that come with lawyers. There were a few that offered specialty financing along with their collection services to ease the burden of shortfalls. So, the question remains: Why are Collection Companies a better way to resolve Condo & HOA Collections then law firms? The answers are multiple:

  • As mentioned Community Association Law firms have many issues to deal with and collections are not their specialty.
  • Litigation is not always the best route to take in collecting this classification of debt.
  • Law firms are not merit based: Win or Lose the association will pay and they will pay up front.
  • It is in the best interest of a law firm to prolong the collection process as they are paid by the hour NOT by results.Facilities and Services:
    • Law firms do not make outbound telephone calls.
    • They do not have specialized customer service representatives working with delinquent owners (both with inbound and outbound calls). Call your community association lawyer and see if you can get somebody on the line to answer a question about a ledger.
    • They do not report delinquent unit owners to credit bureaus.
    • Often, they will not perform the all-important skip-trace on a delinquent owner.
    • Their focus does not allow them to develop the technology needed to make collections cost effective.
    • And in the case of some specialized Condo & HOA Collections firms that do funding law firms will not advance money at the front end.

What do lawyers do that Condo & HOA Collections agencies cannot do? If a board of directors understands the risks and responsibilities only a lawyer can foreclose on a unit. However, foreclosing on a unit only brings “intervening title” to a community association. There is seldom any money at the end of an association foreclosure that makes the association whole again. Your attorney will hand you a limited title (burdened by a first mortgage), a bill for their services and wish you the best of luck. In these cases, to recover the associations money the unit must be rented:

  • The association must invest in renovations preparing the unit for rental.
  • The unit will then need to be marketed by a Real Estate Broker to find a suitable renter.
  • A property manager must be engaged to manage the demands of a rental tenant.
  • The bank who holds the original mortgage can come along and foreclose on that unit rendering the investment useless. They may even demand the rental income the association was able to collect, and worst of all they may be entitled to it.

In short: Is your association ready to become a rental community to accomplish the goals of Condo & HOA Collections. If you are then an attorney would be your best solution albeit maybe not the wisest one?

Now consider what a technology advanced Condo & HOA Collections Company can do to make the association whole again:

  • Information: Today it is critical to know if the unit is in an equity position or not. Advanced technology savvy Condo & HOA Collections firms will determine this in their initial underwriting.
    • A unit that has equity will most likely be able to resolve the issue with the delinquent owner. Resolution of the debt of the matter is the objective NOT litigation. The best way to resolve a debt is through negotiation NOT confrontation.
    • Through Skip-tracing your collections company knows if a unit owner is alive (meaning the asset will NOT be in probate). That’s good to know before you start spending money on legal fees and costs.
    • Knowing if the delinquent unit owner is in bankruptcy is also important as collections (by a lawyer or an agency) cannot begin until the bankruptcy has been discharged.
    • Finding out where your delinquent owner is: The Condo & HOA Collections process cannot begin without this knowledge. Its important to know where to send demand letters and have phone numbers for outbound calls. Finding the debtor is what collection agencies do best and respectfully engaging them is the best route to a resolution.
    • Finding assets. If a delinquent owner has assets a Condo & HOA Collections firm will have leverage to recover funds (assets are discovered in the skip trace).
  • Negotiation and Communication:
    • Specially trained Customer Service Representatives (CSR) speak to debtors every day. They understand the stresses and will listen to a debtor. A well-trained CSR will help them understand their ledger. Often Condo & HOA ledgers are confusing documents with Maintenance Fees, Special Assessments, Fines & Violations, Late Fees, and Late Interest. If a unit owner can be made to understand what they owe and why they owe it, they are more likely to pay.
    • Having the ability to reduce the costs and fees charged to collect a debt goes a long way to clearing it all up.
    • A kind word and a gentle voice can be a more powerful incentive to get a debt paid then a harsh and expensive legal suit.
    • Often owners are unaware that they even owe a debt so before you drop a lawyer on their head let a Condo & HOA Collections firm locate them and work it out.
  • Merit Based:
    • A Condo & HOA Collections firm should always be merit based. If they cannot collect their fees and costs from the delinquent owner the association should not have to pay anything. Due to the special nature of Condo & HOA Collections associations cannot allow a percentage of their principal to be paid to the agency. These are assets of the association which cannot be disbursed without the consent of the entire community. Instead fees and costs are passed through to the delinquent owner and if they are not recovered it is the Condo & HOA Collections agency who takes the loss.
    • Attorneys charge by the hour and unless they are involved in a lucrative personal Injury case will rarely do collections on contingency. Attorneys, always get paid by the association no matter how the matter is resolved.
  • Funding of delinquent amounts:
    • Condo & HOA delinquencies are not like credit card debt,  given that recovery is often a sure thing. Its not a matter of IF a collection will be made but WHEN it will be made. If you live in a Super-Lien State or if a unit has equity a Condo & HOA a Collections firm with funding features will advance a substantial portion of your accounts receivable. This goes a long way to keeping the association from having to increase maintenance fees or making special assessments.

So, when you are discussing the best way to approach your Condo & HOA delinquencies consider all the alternatives and let a specialist in Condo & HOA Collections make a proposal to you.


Mitch Drimmer


Tel: 786-832-9848



Community associations are often burdened by owners not paying their maintenance fees on time, this is an actuarially unfair practice. These consequences are higher maintenance fees, reduction of services, and the misappropriation of management resources. Axela takes over this burden at no cost and no risk to the association’s members while simultaneously making them financially whole. Using advanced technology, the delinquency is discovered and cured quickly at a minimum cost to the delinquent owner and no cost or risk to the association. With Axela on the job it’s “problem solved.”

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