One of the most frequent and troubling issues facing communities in the current economic climate is owners not paying their community fees and accruing large debts which they cannot pay. There are some communities where a significant percentage of owners are not paying. In these cases the community suffers as general maintenance, gardening, pool cleaning and essential services cannot be paid for.
All owners are legally obliged to contribute to community fees within the time period stated by the community. If owners are not paying there are a number of stages to go through to recover the money. The final stage is the legal route, where a judge can embargo the property in order to recover debts.
However don’t jump straight into legal action, in many cases issues can be dealt with amicably and this should be the ultimate aim. Community Presidents should start by speaking to the owner in an open and friendly manner and look to set up an achievable payment plan which can help them out of their debts.
If they refuse then you can then start to apply interest on the delayed payments or decide to take them to court. We have a useful post for you on the step by step process for recovering community fees and how to go about it that you can check out.
In the past communities were reluctant to start lengthy and expensive legal proceedings, but thanks to a change to the law in 1999 it can now be surprisingly quick and efficient and doesn’t even require a lawyer. Here is the process of legal proceedings to recover unpaid community fees:
1. Review all debts at the annual general meeting and take a decision on what debts you wish to take to court. Ensure these decisions are detailed in your minutes.
2. Inform the debtors of your decision and present your claims to the court within three months of the meeting.
3. The judge will inform the debtor of what they are required to pay and request that they either make a payment or appear in court to defend themselves within 20 days.
4. If this does not happen the judge will place an embargo (seizure) on his property, reflected in the property register and he will add interest and costs to the sum. Later instalments due on Community fees will be automatically added.
5. If the matter is not resolved the judge will authorise a community auction where the property is sold in order to recover the debts
It is excellent news that this process is now easier, but of course all legal action is unpleasant and will create rifts within the community. Try to keep community communication channels open, be honest and friendly where possible and show owners that you do understand their situation but that the fees must be paid. If it can be resolved in this manner it will improve relationships and keep owners living happily within the community.