Even with the new rules making litigation a more cost- and time- effective recourse for resolving disputes, litigation can still be draining for all parties, in particular associations because every unit owner is affected when litigation is commenced. For this reason alone, boards of directors should take proactive steps to avoid litigation, where possible. This article recommends a few steps that can be taken to prevent and reduce common headaches that can lead to litigation.
Collections
Delinquent assessments are an unfortunate, regular, and recurring problem that face condominium and homeowners’ associations. If a unit has not paid their assessments in thirty-one (31) days, the association should deem that account delinquent. Once such a determination is made, the board of directors – or the association attorney – should promptly send a written request for payment within ten (10) days of receipt of the notice. Some unit owners simply forget when their assessments are due and a formal reminder helps bring their account to current. If the ten (10) day deadline passes without a response or payment, a follow-up letter should be sent by the board or attorney giving an additional five (5) days to bring the account to current. This second letter serves a vital function in giving unit owners ample notice of their delinquency and time to cure. Moreover, by allocating fifteen (15) days – which is approximately half the pay period – the board of directors shows its reasonableness; it is not hastily jumping to foreclosure on a unit as an immediate knee-jerk solution. If no payment is received after the full fifteen (15) days, then the matter should be turned over to the association attorney for collections. Attorneys have a plethora of recourses available to them to bring unit owners’ accounts to current.
It is strongly recommended that reasonable repayment plans be entered into as a form of confirmed payment – even if less than full – and as a means to avoid lengthy and drawn-out litigation or collection.
Enforcement of House Rules
Although less common than delinquencies, violations of House Rules can cause serious problems for associations, especially when aggrieved unit owners resort to litigation – even after mediation and/or arbitration fail – to resolve their issues with the association.
It is highly recommended that the association act openly and transparently in enacting reasonable rules and regulations, with proper notice requirements and with specific procedures for appealing violations. This way, unit owners know that there are mechanisms in place to help them resolve the violation and to remedy the situation.
Risk Management
Part of the board of directors’ duty to the unit owners is to act responsibly in ensuring that association property is properly maintained. A fundamental step that will protect the association from possible litigation is to hire a responsible on-site manager to perform regular inspections of the property and routine upkeep of common elements. This simple step can avoid personal injury claims which undoubtedly lead to litigation. The on-site manager can also act in a supervisory capacity, making sure that association contractors – security, landscapers, etc. – are performing their duties in a responsible and safe manner. In addition, the board of directors should, through their insurer, perform risk management surveys to ascertain what parts of association property may require more attention and what best practices can be put in place to resolve potential issues.
By taking these proactive, early, and responsible steps, association boards of directors can help unit owners avoid litigation, and allow the community to continue to live together harmoniously and fairly. Call today for a free consultation: 808-465-2500.