2008-05-18 MORTAGE INDUSTRY MELTDOWN AFFECTS COLLECTION OF ASSOCIATION FEES
Recent newspaper headlines throughout the country have made it clear that the mortgage industry is in trouble and that the real estate market is in severe decline. As a result, mortgage foreclosures are on the rise due to declining economic conditions. Many of our community association clients have asked: “What is the effect of these mortgage foreclosures on our ability to collect assessments?” Unfortunately, community associations can become unintended victims of mortgage...
2007-06-15 ASSOCIATION COLLECTION OPTIONS IN THE FACE OF A CHANGING MARKETAssociations generally have two options when it comes to collecting unpaid assessments: suing the owner personally and seeking to collect on a judgment for the unpaid amounts, or foreclosing the association's lien. In a strong real estate market, foreclosing the lien is almost automatic. In this changing marketplace, however, an association's board of directors needs to re-evaluate its collections practices to ensure the board is both honoring its fiduciary duty to the association to collect unpaid...
2007-05-11 IMPACT OF RECENT FORECLOSURE OPINIONOn March 20, 2007, the Minnesota Court of Appeals issued an opinion that could have significant impact on associations' foreclosure of assessment liens. In the case, entitled, In the Matter of the Petition of Option One Mortgage Corporation Regarding Certificate of Title No. 1110609 (A06-764), the Court of Appeals ruled that, because the townhouse association's declaration was ambiguous as to the allowable methods of foreclosure, the foreclosure of its lien was fatally flawed. Prior...
2007-02-12 REVIEWING COLLECTION PROCEDURES TO AVOID DEFAMATION CLAIMSIn June, 2006, the United States District Court of the District of Minnesota issued an order resolving many of the claims in the case of Cohen v. Beachside Two - I Homeowners Association. The Cohen case involved a community association Board that printed in its Board minutes information related to unpaid assessments by an unidentified unit owner. Based partly on the actions of the Board, a unit owner commenced a lawsuit alleging various tort claims against the...
2004-01-23 GARNISHMENT -- A POWERFUL REMEDY
Imagine this scenario: you are owed $2,000.00 from an individual for goods and services you provided. For months, you are promised that payment will be made but no payments come in. At a certain point, you grow tired of the excuses and you decide that you are going to proceed with litigation. You go in to Court, you win your case and you get a judgment. However, you still receive nothing on your debt. Now what? Many creditors often find themselves in this situation. Most of the time, the amount is...
2003-06-11 BANKRUPTCY BASICS FOR COMMUNITY ASSOCIATIONS
The purpose of this article is to provide you with a basic understanding of the bankruptcy process and what can be done to protect the community association’s rights once a bankruptcy is filed by one of the community association’s homeowners. Some creditors simply throw up their hands and write off the debt believing that the bankruptcy has removed all hope of collection. Other creditors simply ignore the bankruptcy filing and continue their attempts to collect the debt. Either course of...
2003-06-11 SUCCESSFUL COLLECTION PROCEDURES
Successful collection of community association assessments and related fees begins with the adoption of a collection policy by the community association’s board of directors. The collection policy will guide the community association’s board of directors as future collection issues arise. ADOPTING A COLLECTION POLICYSample collection policies are described below. The conservative collection policy is appropriate for most community associations. The...
2003-06-11 Did you know that Owner Bankruptcy Filings Do Not Discharge Association Assessments or Pre-Petition Liens?Many associations mistakenly believe that unit assessments are fully discharged when an owner files for bankruptcy protection. Pursuant to Section 523 (a) (16) of the U.S. Bankruptcy Code (cited as 11 U.S.C. 523 (a) (16)), association assessments are not discharged in bankruptcy. The foregoing section states that the bankruptcy discharge “does not discharge an individual debtor from any debt for a fee or assessment that becomes due and payable after the order for relief to a membership association...
2003-02-11 Nonprofit Corporation Registration RequirementsLEGISLATIVE ALERT: NONPROFIT CORPORATION REGISTRATION REQUIREMENTS COMMUNITY ASSOCATIONS MUST REGISTER WITH THE MINNESOTA SECRETARY OF STATE, OR ELSE… CAI Spring Conference 1997 Overview of Corporate Status. Incorporated Associations Almost all community associations are nonprofit corporations and subject to governance under Minnesota Statutes Chapter 317A, known as the Minnesota Nonprofit Corporation Act (the “Act”). Unincorporated...
2003-02-01 Summary of MCIOA Opt-in Advantages Opting-in to the Minnesota Common Interest Ownership ActSummary of MCIOA Opt-in Advantages Opting-in to the Minnesota Common Interest Ownership Act The following is a brief outline of the advantages and disadvantages for townhome associations opting-in to the Minnesota Common Interest Ownership Act (“MCIOA”). MCIOA became effective on June 1, 1994, but with respect to townhome developments it applies only to those which were originally constructed on or after that date. Thus, in order to become governed by the statute, the Association...
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