Maintenance Fee Collection

  Assessment collection is the lifeblood of a community   association. The board of directors has a fiduciary responsibility   to ensure that assessments are received in a timely manner.   Failure to do so may prevent it from fulfilling its other   responsibilities: The administration of the association and the   preservation, maintenance and enhancement of property values.   If assessment collection problems are widespread, the board   may be forced to curtail necessary maintenance or fail to legally   pursue deed restriction violations, causing property values to   decline. As a result of the negative impact caused by the   outstanding assessments, many community associations, which   are facing problems with the collection of maintenance   assessments, are finding it increasingly difficult to apportion   their limited monetary resources for the attorneys' fees   necessary to fund the collection effort.

  Under this format, the Firm agrees to invoice legal fees incurred   in collecting delinquent assessment accounts as funds are   collected from the delinquent homeowner. Our clients are only   responsible for out of pocket expenses incurred by the Firm in   connection with a specific matter we are handling for them. The   agreement applies to all phases of the collection effort including   pre-litigation activities such as demand letters.

  Under this billing format, our clients no longer find it necessary   to devote a large portion of their community’s budget to legal   costs which, in the past, was necessary in order to pursue   delinquent maintenance assessment accounts. This is true   because our clients who use this billing format are, in most   instances, not invoiced for the legal fees incurred by the   Firm in collecting the outstanding maintenance   assessments until payment is collected from the   delinquent homeowners who have become a part of the legal   collection process. This helps to ensure, to a large extent, that,   while the Firm pursues and collects the entire debt owed to the   Association by the delinquent homeowner, an association’s   cash outlay for legal costs closely approximates the cash   inflow received from the collection process. Within the   limitations outlined in the representation agreement, we initiate   and pursue the collection process at no upfront legal fee cost   to a community association regardless of the amount of time   necessary to collect the outstanding sums.

  The Firm agrees to invoice legal charges incurred for a collection   matter, not in the month in which it is incurred but, rather,   when the sums are collected from the homeowner responsible   for the debt. Throughout the collection process, the Firm acts   as the collecting agent for the Association. As the Firm collects   a delinquent maintenance fee debt owed by an individual to the   community, the Firm will collect the checks, money orders,   and/or cash payments paid by homeowners and will send them,   in the form tendered, directly to the Association. The   Association, in turn, will be invoiced the legal fees incurred   for a given matter as sums are collected from a   homeowner. The payments collected by the Firm will be   forwarded to the Association accompanied by an invoice which   allocates, for the matter upon which payments are collected,   the portion of the sums collected that are to be used to pay   the legal charges previously incurred.

  The legal charges incurred every month for a given matter are   itemized on a client’s monthly status report and are the basis   for the legal charges set forth on the invoices which are billed   to the Association upon receipt of a homeowner’s payment. For   those matters in which the Firm has agreed to invoice legal   charges incurred for a matter, not in the month in which it was   incurred but, rather, when the sums are collected from the   homeowner responsible for the debt, a line item, at the end of   each collection matter listed on the Monthly Status report, will   set forth the cumulative total of legal fees incurred to date for   the specific matter which has not yet been invoiced or paid.   The status report entry for a given collection account will   indicate when the debtor has entered into a written agreement   in favor of the Association to repay the outstanding debt. Click   here to view a sample Status Report.

  Even though most associations have a legal right to foreclose   on a property for failure to pay delinquent maintenance fees,   the reality behind the process is that very few properties   are actually foreclosed upon. With all the legal collection   matters that we’ve handled over the last fifteen years, only a   couple of properties which had already been abandoned have   actually been foreclosed upon. This is true because the legal   process we employ provides the detailed notice and adequate   warning sufficient to motivate debtors to payoff their obligations   early in the collection process. Moreover, it is the leverage   created from the remedy of foreclosure that ultimately   causes the most obstinate of individuals to pay their   outstanding debt. Importantly, homeowners are now provided   with an opportunity under state law to redeem, or repurchase   their property, during a period of at least six (6) months   following its sale at foreclosure. If the Association was the   purchaser at foreclosure sale, typically, the homeowner would   pay, in order to require their property, only those costs already   owed to the Association under the terms of the judgment   authorizing the foreclosure.

  Should an association have any questions with regard to this   service or program, or should it desire a meeting with a member   of the firm, please feel free to call us at 713-964-5340, fax your   requests to 713-964-5341, or email the firm at   info@gammonlaw.com.

    
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