collections and enforcement presentation - javier b. delgado with carpenter hazelwood
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Three Homeowner Association Collection & Enforcement Scenarios
Poll - Our most difficult violations involve:
Select one:
A. Architectural violations
B. Landscaping
C. Parking
D. Pets
E. Renters
Carpente r , Haz lew ood, De lgado & Bo len , PLC
Poll - Our Enforcement Policy is to:
Select one:
A. Do nothing & hope it gets better
B. Violation letters & fines (if you have
fining authority)
C. All of the above + violation letters
from an attorney
D. All of the above + we take serious
violations to Court
E. It’s a case by case approach Carpente r , Haz lew ood, De lgado & Bo len , PLC
Scenario #1 – You’re Killing my Zen!
The Restrictions state: “Lot Owners must install
grass throughout the front yard…the Board is
authorized to impose fines…” The Fine policy
calls for graduated fines: $0/$25/$50/$100
(maximum). Shortly after moving in, the Jones
install a high end traditional “Japanese style”
rock garden. Management has sent the Jones
letters over a 3 month period demanding that
the Jones install grass as required. The Jones
are being fined at the rate of $100.00 a month.
So far, the Owners have refused to comply.
Carpente r , Haz lew ood, De lgado & Bo len , PLC
Responses
Do you:
A. Continue to fine & have management
send letters
B. Ignore it – it looks good!
C. Grant a variance
D. Confront the Jones in person
E. Authorize an attorney violation letter
Carpente r , Haz lew ood, De lgado & Bo len , PLC
Responses
Do you:
A. Continue to fine & have management
send letters
B. Ignore it – it looks good!
C. Grant a variance
D. Confront the Jones in person
E. Authorize an attorney violation letter
(Boards have a duty to enforce the
covenants)
Carpente r , Haz lew ood, De lgado & Bo len , PLC
Nonprofit Act
• N.M.S.A. § 53-8-25.1: standards of conduct for directors
• A director must perform his or her duties in good faith,
• in a manner the director believes to be in or not opposed to the best interests of the corporation; and
• with such care as an ordinarily prudent person would use under similar circumstances and in a like position.
Carpente r , Haz lew ood, De lgado & Bo len , PLC
Scenario #2 – Don’t Shed on Me
The Restrictions state: “Sheds cannot be installed
without prior approval of the Architectural
Committee…sheds cannot be higher than six (6)
feet tall… Board is authorized to impose fines & to
pursue injunctive relief…Board is authorized to
grant variances…”. Prior boards have a history of
lax shed enforcement. The new Board
commissions a shed survey. The survey notes
that the Ramones installed a shed, without ARC
approval & that the shed is 8½ fee high. The
Ramones have ignored demands to comply from
both management and the attorney.
Carpente r , Haz lew ood, De lgado & Bo len , PLC
Responses
Do you:
A. Continue to fine & send letters
B. Ignore it
C. File an injunctive lawsuit
D. Grant a variance
E. I’d do something different and I’ll share it
Carpente r , Haz lew ood, De lgado & Bo len , PLC
Responses
Do you:
A. Continue to fine & send letters
B. Ignore it
C. File an injunctive lawsuit
D. Grant a variance (& enforce new
violations consistently going forward)
E. I’d do something different and I’ll share it
Carpente r , Haz lew ood, De lgado & Bo len , PLC
When Fines Don’t Work
• Injunctive relief
• Court action to compel compliance
• Quality of life: weeds, trash cans, etc. versus
• Serious violations: architectural, health & safety
• Evidence?
• Defenses – selective enforcement/ lax enforcement
• Take corrective action going forward
Carpente r , Haz lew ood, De lgado & Bo len , PLC
Poll - Our worst collection problems involve:
Select one:
A. Frequent fliers
B. Lender owned or soon to be lender
owned properties
C. Rentals
D. Out of state owners
E. Deniers
Carpente r , Haz lew ood, De lgado & Bo len , PLC
Scenario #3 – He just won’t pay!
O’Connor has a history of not paying. The
Board has assessed his account late fees,
sent collection demand letters, recorded a
Notice of Lien against his Unit, & had the
attorney send a an attorney collection demand
letter… but he still won’t pay. O’Connor has
responded by telling the attorney “times are
tough… relax, the board will get paid when I
sell next year, when property values come
back”. The owner appears collectible.
Carpente r , Haz lew ood, De lgado & Bo len , PLC
Responses
Do you:
A. Wait it out – times “are” tough
B. Wait until the delinquent owner sells
C. Have the attorney send more letters
D. File a personal money judgment lawsuit
E. Post a “Deadbeat O’Connor” notice
Carpente r , Haz lew ood, De lgado & Bo len , PLC
Responses
Do you:
A. Wait it out – times “are” tough
B. Wait until the delinquent owner sells
C. Have the attorney send more letters
D. File a personal money judgment
lawsuit (owner appears collectible &
delay only invites expense and
complications)
E. Post a “Deadbeat O’Connor” notice
Carpente r , Haz lew ood, De lgado & Bo len , PLC
Assessment Collection
• Be aggressive
• Be consistent
• Inaction = disastrous consequences
• Waive “soft costs”
• Utilize payment agreements
• Focus on the newly delinquent
Carpente r , Haz lew ood, De lgado & Bo len , PLC
Collection Criteria
• In state? vs. out of state
• Lender foreclosure activity/lender owned?
• Current owner vs. former owner?
• Credit report?
• Bankruptcy?
• Active duty military?
• Working age vs. retired?
• How much is owed?/what is owed?
Carpente r , Haz lew ood, De lgado & Bo len , PLC
Assessment Collection & Imposition
• Regular Increases Necessary
• Inflation
• To Maintain the Status Quo of the Community
• Build Reserves for periodic replacement/maintenance
• Reserve Studies – having and funding avoids Board liability
• Avoids Special assessments
Carpente r , Haz lew ood, De lgado & Bo len , PLC
Pending Legislation
• SB 30, SB 497 & HB 210
•Codification of Board Duties
•Board removal
•Disclosure
•Lien rights
•Declarant control
•Voting
•Notice of a HOA
Carpente r , Haz lew ood, De lgado & Bo len , PLC
Questions?
Javier B. Delgado
javier@carpenterhazlewood.com
505.242.4198 Albuquerque
505.466.1566 Santa Fe
Carpente r , Haz lew ood, De lgado & Bo len , PLC
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