Procedure for Home Owner Association to file liens

I am trying to find out the procedure for filing liens against homeowners that violate covenants, dont pay association fees, etc.

Currently we pay a lot of money to a Management company for this, but I would believe this could be done by individuals from our Board of Directors?

Any insight would be appreciated.

Many times a management company handles such matters, which naturally incurs substantial fees for the dues-paying members of a given homeowners’ association (HOA). Prosecuting such actions by members of the Board of Directors (BOD) is certainly a viable option. I would just add a cautionary note that it would certainly by prudent to retain counsel, at least for the first few cases. Beyond that caveat, here are my thoughts on proceeding.

First, I would recommend drafting the original governing documents forming the HOA – or amending existing articles as appropriate – to explicitly give this authority to the BOD. Make sure to fully comply with the particular state’s procedural and filing requirements for forming an association.

In particular, care should be taken to differentiate between mere assessments as opposed to the intention to create an actual lien. This should be an escalating procedure of sorts – i.e. clearly spell out how much assessment is owed, when due, fees for late payments, etc. Next, spell out escalating penalties for failing to comply with covenants or stay current on fees.

To my way of thinking, I would suggest following an outline covering at least the following terms as clearly and unambiguously as possible:

1. ASSESSMENTS

2. DELINOUENCY

3. INTEREST

4. LATE NOTICES

5. NOTICE OF INTENT TO CREATE LIEN AND ATTORNEY'S FEE:

6. LEGAL ACTION

7. PAYMENTS CREDITED

8. PARTIAL PAYMENTS

Although the law has generally been favorable toward homeowners’ associations in such cases, there are some definitely pitfalls one would want to try to avoid. One consideration to keep in mind is staying current with federal bankruptcy laws. Although the focus is on Arizona law, I found that this article provided a nice concise overview of considerations to keep in mind: http://www.hoalaw.biz/bankruptcy.htm.

Another potentially even more serious circumstance would be over-reaching on the part of an HOA. For example, most notably in California there have been RICO actions prosecuted again offending HOAs, which of course carry the threat of treble damages. Careful study should be made of how a particular jurisdiction views non-judicial foreclosure and the boundaries of such remedy. On a more favorable note, however, recent cases have been holding in favor of HOAs in finding that their liens are not extinguished in foreclosure proceedings. Traditionally, HOA assessments were subordinate to the first deed of trust on a property. Thus, there was no recourse but to redeem if the senior deed of trust foreclosed on the property.

Realizing that HOAs are often strapped for cash, I might also suggest somewhat of a middle of the road approach. Perhaps retaining an attorney or a lien service (here is an example of a fee schedule: http://www.liencollections.com/fee-schedule.html) might be reasonable for say the first three cases encountered by the HOA. Thereafter, the BOD could proceed pro se in filing its actions and seek competent legal counsel only as necessary.

Nice answer!!