Is HOA & Condo Debt ‘Consumer Debt’?

There is some debate in the community association industry what type of debt delinquent assessment constitute.

Is it a consumer debt like unpaid credit card bills?

Or is it something else?

Personal opinions vary, but the courts are clear, and their position is critical to how delinquencies are addressed and who should be tasked with collecting them.

Precedent in Florida: Assessment Collections is Subject to the Same Consumer Protections as Other Debts

The Fla. 1st District Court of Appeals cited in a recent case, Kelly v. Duggan, 282 So. 3rd 969 (Fla 1st D.C.A. 2019) considered whether community association debts fall into the category of consumer debts.

In the ruling, the court states: “Accordingly, we hold that condominium assessments are consumer debts under the FCCPA such that a consumer may seek civil remedies for violations thereof. “

To be clear the court considered both the Federal Fair Debt Collections Practices Act (FDCPA) and the Florida Consumer Collection Practices Act (FCCPA). Both of these pieces of legislation protect consumers from abusive, harassing, and deceptive collection practices.

Of course, the Florida Act deals with Florida cases only and a state court cannot set precedent on a national basis. However, it would prudent for community associations nationwide to consider this ruling a cautionary tale to be applied throughout the nation.


In this case, homeowner Kelly was delinquent in their community association assessment payments. The President of the board locked the unit owner out of a storage space, made derogatory public statements, and disclosed personal information about the delinquent unit owner.

All of these actions constitute a violation of the FCCPA. What is more significant is that the board president exposed the community association to a violation. This can be an expensive transgression for the community.

The “take away” is that community association debts should not be handled by management companies beyond the “courtesy letter” that is customarily sent out. Once it has been determined that a unit had defaulted the file needs to go to professional debt collectors or to an attorney in order to lien and foreclose on the unit. Even righteously angry board members can be held responsible for fines and civil legal actions for violations of debt collection laws.

It’s considered general knowledge that you cannot approach a person who has applied for protection under bankruptcy laws with the intention of collecting a debt. it is just as important to know that non-licensed people or business entities (boards and management companies) cannot act against Condo & HOA debtors. Doing so could be very expensive. 

Delinquent Owners? 6 Things Boards and Managers Should NEVER Do.

So if you are a community manager or a member of a board of directors don’t do the following:

  • Don’t Prevent a person access to their habitat in any way.
  • Don’t turn off any of the delinquent owner’s utilities (that includes water, electricity and yes, cable TV).
  • Don’t put up a “list of shame” and reveal publicly that any specific member is delinquent in their payments.
  • Don’t discuss a member’s delinquency outside of a board meeting. Keep it to yourself. As it is a matter of business, specific delinquencies can be discussed in closed board meetings, but using an address or unit number rather than the owner’s name is always a prudent decision.
  • Don’t call a person outside the hours of 8:00am -9:00pm to discuss their delinquency. If you do call and the person hangs up do not call again for another day.
  • Don’t make threats that you will sue, lien, foreclose, or take any legal action. That is what collection agencies and attorneys are for. Once you have decided to take a course of action, let the professionals do the work.

When a unit defaults, it’s time to bring in professionals. It is always best to consider all the options that a community association has. A specialized collection agency will engage your owners and work with them to resolve the issue without running you afoul of the law. Contact Axela Technologies for a free demo and see how the future collects.

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