Recently, Attorney Naomie Kweyu  scored a huge bench trial win in a southeastern Wisconsin circuit court on a foreclosure and money judgment action.

Summary

If you want the best chance of collecting outstanding assessments, late fees, interest and attorney fees, you need to be organized, have a collection policy and follow your documents. Doing so can make a big difference to your association, as one of our clients recently learned – read more below:

Facts

Unit Owners were multiple months delinquent in payment of their monthly condominium assessments and also owed unpaid fines for rental violations. The Association sent the Unit Owners’ account to us for collection.  We proceeded to file a statement of condominium lien against Unit Owners’ unit. After receiving the demand and lien notices, the Association received payment from the Unit Owners for the delinquent assessments only – no payment was made for the accumulated attorney fees and costs for the collection. Despite being sent additional notices warning of the remaining outstanding balance and pending foreclosure action, the Unit Owners refused to pay. The Association filed suit.

Court

Unit Owners argued that they submitted payment for the delinquent assessments before the Association filed its lien. This became the determinative issue before the Court. As simple as this may sound, the case became more complex (and expensive) because the Unit Owners stuck to their story, adamantly arguing that the payment was made prior to the lien. When no resolution was reached, the suit progressed to a bench trial to the tune of over $32,000 in claimed attorney’s fees and costs being owed to the Association (up from the roughly $700 owed at the time of the lien filing).

The Association’s property manager and board members were key witnesses at the trial, ultimately demonstrating to the Court when the payment was received. In the end the Court determined that the Unit Owners position was not credible and found that the payment in question was made after the statement of condominium lien was filed. The Association requested judgment, including all attorney fees and costs.

Unit Owners argued that the Association should not be granted all its attorney fees as it was unfair to the Unit Owners, who are Association members, and that the trial could have been averted “a long time ago.” Attorney Kweyu pointed out to the Court that all the unit owners of the Association are members, and it was the other unit owners who would ultimately be responsible for paying the attorney’s fees because of the defendant Unit Owners continued refusal to pay. The Court ruled in the Association’s favor awarding the Association over $32,000 in attorney’s fees and costs (essentially all the attorney fees sought by the Association).

Takeaways for your Association

To reduce the difficulty of collecting unpaid assessments and ease trial preparation in those cases when the collection escalates, make sure your Association has:

1. Up-to-date and enforceable governing documents, ensuring all documents are compatible (to learn more click HERE);
2. An enforceable collection policy that includes:
3. Language on how payments are applied (i.e., interest, late fees, then assessments);
4. Recoverable attorney fees for collection;
5. Strong language on NSF and conditional payments.
6. A fining policy/schedule.
7. The policy should be progressive in nature (warning, $50 for first violation, $100 for second and subsequent violations; and
8. If a tenant is in the unit, make sure your Association knows how to fine correctly (click HERE to learn more about tenant fines).
9. A grievance procedure.
10. A timeline to turn delinquent accounts over to collection attorney at 60-90 days past due.
11. A policy to turn off online payment access once the unit owner is sent to collections, and require all communication to go through the attorney.

To learn more about this particular case and trial preparation as it relates to Associations, please tune in to our upcoming Association Academy: Lunch With Lawyers webinar on March 9, 2023. Attorney Miske and Attorney Kweyu will be presenting on FHA claims of harassment and trial preparation.

More than 750 condominium associations and HOAs trust The Condominium & HOA Law Team‘s experience in handling matters that span all aspects of condo and HOA law, including real estate, corporate, construction, environmental, insurance, finance, tax, bankruptcy and litigation. Let us help with any issues that may arise.