Show Me the Money Collections, Foreclosure & Evictions

The first of the month rolls around and it’s time to pay the bills that keep your building operational. Repairs might need to be made, staff salaries paid, maintenance done to keep all the common elements running, and supplies reordered. The consistent influx of funds from residents' monthly fees is what makes all of this possible, and keeps a building or HOA functional and solvent from month to month. But sometimes—not often, but sometimes—residents don't hold up their end of the condo-living contract, and fall into arrears. 

Reasons for Nonpayment

“Generally speaking, I would say that [people unable to pay dues] fall into one of two broad categories,” says James A. Erwin, a founding partner at Erwin Law in Chicago. “And those are either just financial distress—‘I just can't afford it'—or they feel the association owes them money for something, such as claims of damages of some sort, and so they're not paying as an offset.” 

Mark R. Rosenbaum, a principal with the law firm of Fischel & Khan, Ltd. in Chicago, notes that, “For a while, it was unemployment—people had lost their jobs. I'm seeing that a little less. But I have to tell you, most often people don't tell me why they're not paying. They just don't pay.”

A lot of these excuses are not really seen as valid reasons for not paying monthly dues. According to Nicholas P. Bartzen, an associate attorney with the law firm of Levenfeld Pearlstein, LLC in Chicago, “Reasonable mistakes (i.e. bank transfer glitches and misaddressed checks) occur frequently and can be easily resolved. It’s those instances when owners are actually unable to pay but continual reliance on these ‘reasonable mistake’ excuses eventually delegitimizes them. On the other hand, the ‘association failed to maintain XYZ’ are common but are not considered by Illinois courts to be germane to the issue of collections. If a unit owner has legitimate issues with the board’s operation, the owner’s recourse does not include withholding assessment payments.”

While there are very few legal reasons a resident can use as an excuse as to why they did not pay their monthly dues, the board doesn’t have to begin collections right away. 

Read More...

Related Articles

When Residents Are Disruptive

Tips for Keeping the Peace

Coping With Arrears

When Residents Fall Behind

Q&A: To Foreclose or Not?