Changes in Community Association Law: Are You Prepared?
Posted on January 1, 2020 9:54 PM by Michael LaPoint
State Legislators review and discuss multiple proposed bills every year aimed at community associations and the companies that manage them. 2019 was no exception to this pattern and resulted in the passing of a few new bills governing community associations.
Of particular interest is Senate Bill 1531 (SB1531), which changes a number of assessment collection requirements for community associations, management companies, collection agencies, and attorneys, and imposes new ones. Specifically:
- SB1531 has extended the deadline to foreclose on an assessment lien from three years to six (6) years "after the full amount of the assessments become due." In theory, this provides associations more flexibility to collect from owners by utilizing options such as longer payment plans before proceeding with foreclosure. In reality, though, the biggest effect this change has is that title companies can now collect assessments going back six (6) years from the date of closing. We see this as a positive change for community associations.
- The bill requires the final notice sent to an owner before the delinquent account is referred to the association's collection agent or attorney ("Last Notice") be sent via certified mail return receipt requested at least 30 days before the account is turned over. The bill also requires the following statement be contained in the "Last Notice" verbatim in boldfaced type or all capital letters:
YOUR ACCOUNT IS DELINQUENT. IF YOU DO NOT BRING YOUR ACCOUNT CURRENT OR MAKE ARRANGEMENTS THAT ARE APPROVED BY THE ASSOCIATION TO BRING YOUR ACCOUNT CURRENT WITHIN THIRTY DAYS AFTER THE DATE OF THIS NOTICE, YOUR ACCOUNT WILL BE TURNED OVER FOR FURTHER COLLECTION PROCEEDINGS. SUCH COLLECTION PROCEEDINGS COULD INCLUDE BRINGING A FORECLOSURE ACTION AGAINST YOUR PROPERTY.
What does this mean for your community? If you are one of our clients, the only change is the mandated language, which we have already implemented. The required 30-day notice period is part of our current practice. Our cost for sending the Collection / Lien Demand Letter, as we call it, already includes delivery via certified mail return receipt requested. If you are currently being managed by one of our competitors, we suspect that the certified mailing requirement will result in an increased fee, which can be charged back to the delinquent owner's account.
- Starting January 1, 2020, associations and their management companies are no longer able to send out annual payment coupon books. Instead, SB1531 requires associations to provide "a statement of account" with the same frequency that assessments are provided for in the governing documents. The bill elaborates on what must be included in the statement and exceptions to the statement requirement (e.g. accounts at the attorney for collections). It is already our practice to send out statements in lieu of coupon books so this change does not affect our operations. The increased mailing of statements will, however, result in increased charges to associations managed by many of our competitors who contractually have different charges for statements and coupon books, many of whom even charge for copies, postage, and envelopes.