WATCH OUT! – Collection Agencies taking advantage of HOAs and Condos

An association’s monthly or quarterly assessments are the life blood of the community. Without the ability to count on the steady stream of unit owner assessment payments properly budgeting or even meet its regular expense obligations becomes a challenge if not impossible. Some communities have larger collection problems than others and are desperate to improve the collectability of assessments. Certain collection agencies in south Florida have preyed on associations’ financial desperation with promises of up front advances or funding of unpaid assessments in exchange for these collection agencies receiving certain collection rights. This is where problems arise. Typically collection services agreements are thrust on an association by these collection agencies. Unwitting Boards of Directors have been known to sign whatever agreement is provided to them by the collection agency in without the Association’s counsel having an opportunity to review and comment. These collection service agreements often times are so grossly lopsided in favor of the collection agency selling off large portions of future assessments in exchange for small up front advances. These collection agencies lock in the association to unconscionable terms, both in pricing and length of terms, with virtually no benefit to the association. Collection agencies routinely fail to advise the association client that they cannot perform the services of an attorney and are barred from preparing or filing Claims of Lien for unpaid assessments or other monetary obligations and cannot file lien foreclosure lawsuits on behalf of the association, major components to an association’s collection practice and procedure.