Playing The HOA – A Continuing Study in Audacity (Part II)

Challenge Accepted: Collecting Delinquent HOA Assessments from China for Condos in South Carolina

By: Michael Jenner, MBA, as told to Mitchell Drimmer, CAM


The association’s troubles began when a group of Chinese investors purchased properties within the condominium between 2014 and 2015. The developer of the community defaulted on agreements, leading to financial distress for the association. At least 75% of the units were owned by foreign investors residing in China, making communication and collections difficult. Axela’s Collection Solution started handling the association’s delinquencies in 2019, using demand letters, calls, and emails to reach out to owners.

The developer offered fixed rental returns of 8% on the investment price but defaulted on the agreement and stopped paying the agreed rental income to owners from August 2017 forward before eventually abandoning the properties entirely in October 2018, as did the investment management’s company that was appointed by the developer. Shortly thereafter, the association’s delinquency rate became a big problem for the entire community.


Challenges Faced:

  • Foreign Debtors: 75% of debtors were foreign investors in China.
  • Undeliverable letters and limited communication: Given that most of the owners were Chinese investors residing in China, many of the letters were returned as undeliverable, and outbound phone calls were not as effective as they typically are for a “domestic” type of collection.
  • Transfer of Ownership: Ownership transfers to an investment management corporation (a subsidiary of the developer).
  • Exclusion of Liens: Association liens were excluded from property closings.
  • Bad Faith Attempts: The management corporation used bad faith tactics like requesting to settle for unreasonably low amounts and threatening litigation.
  • Bringing in Relief: The association manager knew there must be a better way and submitted the delinquent units to collections in early to mid-2019. Demand letters were sent out, outbound phone calls were made, and email campaigns to the owners were initiated. Despite the difficulty in reaching overseas owners, the collection company was still able to resolve many of the accounts without the need for lien recordings and foreclosure filings. For the remaining accounts, claims of liens were filed on the properties. 


Extensive research to locate representatives of the property owners to which ownership was transferred and established a point of contact.  Engagement was initiated and collection efforts against both individual owners and the corporation under the concept of joint and several liability, leveraging the association’s governing documents and state statutes.

Negotiation and Settlement: 

Despite low-ball settlement offers and litigation threats, persistence led to the involvement of the investment management corporation in negotiations. Axela’s Collection Solution rejected inadequate settlement offers and threats, protecting the association’s interests.

Shortly thereafter, it became apparent that there was a trend where a Chinese corporation by the same name as the investment management corporation would acquire ownership of a property with a lien against it. The ownership transfers were conducted via a “Warranty Deed,” and the properties all closed in escrow. However, the association’s liens were excluded from said closings. 

After additional research, Axela learned that the investment management corporation was a subsidiary company of the developer and that the developer made a deal with many of their Chinese investors to repurchase the units from the investors at the original purchase price to make good on the default of the returns they were initially promised. Axela’s Collection Solution then contacted the title company to request additional information on the purchaser, but the title company would not disclose any further details.

After learning of these ownership transfers, the collection agency restarted the collection process against the investment management corporation for the full balances owed on the units acquired under the concept of joint and several liability, as provided by the association’s governing documents and state statutes. 

Simultaneously, Axela’s Collection Solution continued to seek a representative of the investment management corporation and located a firm based out of New York. This was the beginning of a story that has been heard many times before, where a large corporation attempts to strong-arm a struggling condominium association. There were many low-ball settlement offers made by the investment management corporation with respect to the past due balances, as well as threats of litigation, all of which were rejected by Axela’s Collection Solution and the association’s board of directors. Just as Axela and the association were considering gearing up for foreclosures against these units, the investment management corporation came to the table, and Axela was able to enter a six-figure global settlement across forty-one delinquent units on behalf of the association. 

This six-figure settlement would be paid over the next six months. The agreement included a “confession of judgment” clause, ensuring compliance with the payment plan by preventing foreclosure defenses. In the event of default, the association could proceed with uncontested foreclosures, thereby securing payment.

Lessons Learned:

  1. Thorough Research: Extensive research is crucial to identify responsible parties and their representatives. Failure to thoroughly research collection matters allow those with the audacity to play games with associations.
  2. Strategic Negotiation: Effective negotiation can lead to favorable settlements and agreements, even when some parties initially respond in bad faith.
  3. Understanding what is possible and being resolute: Understanding the legal provisions to hold both individual owners and related corporations accountable is an imperative part of community association governance and management.
  4. Creative Payment Plan Terms: Incorporating “confession of judgment” clauses can ensure compliance and swift action in case of default.
  5. Persistence: Persistence pays off when dealing with challenging collection cases.

The condominium association was facing a challenging financial crisis, with nearly 75% of its units owned by foreign investors in China, when it turned to Axela  for help. The association’s dire situation involved mounting delinquent assessments, unresponsive owners, and the need to recover over $300,000 in past-due assessments. Axela’s strategic approach, negotiation skills, and use of a “confession of judgment” clause in a payment plan ultimately led to a successful resolution.

A “confession of judgment” in the payment plan agreement stipulates that in the case of default, investors would waive all foreclosure defenses, meaning the association would move to take ownership of all the properties via an uncontested foreclosure, a measure that ensures the owners stay compliant with the agreement. 


This case study showcases how a knowledge-based strategic approach to recovering delinquent assessments for community associations is the standard for collections in the community association industry. Through diligent research, negotiation skills, and a well-crafted settlement agreement, the associations long standing delinquency problem was successfully resolved the complex situation with a foreign corporation, ensuring the association’s financial recovery. The total out-of-pocket expense to the association for Axela’s expert collections was $0.

If you have any collection issues, contact Axela Technologies ( and let us show you why our technology is “how the future collects.”

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