QUESTION: My spouse was recently laid off from work, and we’re concerned that we won’t be able to pay our HOA assessment that will be due on July 1st and late on July 31st. If we’re unable to make that payment, what collection actions occur and when?
ANSWER: As a result of the Texas state legislature law adopted in 2011, there are two paths of action that may result from the non-payment of HOA assessments, as described in CCR ARTICLE XXXV, COVENANTS FOR MAINTENANCE ASSESSMENTS. While that article should be read in its entirety so that all of the provisions for collecting HOA assessments not paid within 30 days of the due date are known and understood, the following summarizes the collection actions and fees that result from non-payment of an assessment:
In Part 1 of this Springs CCR discussion, the collection provisions that are implemented, and the fees charged to the delinquent owner for those delinquencies in which a Payment Plan was approved and activated were presented. In Part 2, the collection provisions that are implemented when a Payment Plan is not active are provided. We’ll first review those actions that occur under both Path 1 and Path 2, which were also provided in the Path 1 Springs CCR discussion:
For both paths of actions resulting from non-payment, the following will occur:
- o HOA assessments are currently due on January 1st and July 1st of each year
- o HOA assessment payments are late on January 31st and July 31st, respectively
- o The Association Manager will have a Payment Plan generated for each property whose assessment is not paid by January 31st or July 31st. The owner will be charged sixty dollars ($60) by the Management company to defray the cost associated with the Payment Plan’s generation, mailing, and processing
- o The owner will be charged a late fee of twenty-five dollars ($25), effective on the first day that the assessment is late (January 31st/July 31st). That fee is collected by the HOA in accordance with the Reasonable Late Fees section of CCR Article XXXV.
- o The owner will be charged interest on the unpaid assessment at a rate of twelve per cent (12%) per annum, and begins accruing on the due date (not the “Late On” date). This interest accrues until the delinquent assessment has been paid in full, regardless of which path of collection action is taken
Path 2 – No Payment Plan: Collection actions are implemented when a Payment Plan is not active because (1) a Payment Plan does not become active, (2) a Payment Plan is voided because an owner defaults on the terms of an active plan, or (3) an owner has defaulted on the terms of a Payment Plan within the last two (2) years. In addition to the actions described above that are implemented regardless of the delinquency resolution path taken, the following actions occur:
- o An account which has a delinquent assessment balance of more than thirty (30) days, but less than sixty (60) days will be assessed a late charge of fifty dollars ($50)
- o An account which has a delinquent assessment balance of three (3) months or more will be assessed a late charge of one hundred dollars ($100) per month during each month that the delinquency continues. The total amount of late charges assessed may not exceed the amount equal to the annual assessment for the year that the delinquency occurred ($720 in 2014).
- o In addition to the late fees assessed, above, if an account becomes ninety (90) days delinquent, the HOA/Management Company will present a final written notice of the delinquent balance to the owner, with a deadline to pay. That notice is sent by certified mail, return receipt requested.
- o If an account remains delinquent beyond the deadline presented in the final notice letter, the delinquency will be referred to the HOA’s legal counsel for legal proceedings, including payment demand, lien filing, and commencement of foreclosure actions.
- o When referred to the HOA’s legal counsel, all costs generated by the legal counsel will be billed directly to the delinquent owner for payment to the legal counsel, and will be in addition to the late charges and collection fees charged and payable to the HOA and Management Company.
Example:
Owner XYZ fails to pay their $360.00 HOA assessment due on July 1st by July 30th. Non-payment results in the following, assuming total amount due is paid by the end of the 4th month following the “Late On ___” date:
$360 HOA assessment due July 1st, late on July 31st
25 HOA late fee on July 31st (1st month late)
4 Approx interest charge on $360 principal, 12% rate - July
60 Management Co for Payment Plan generation – August
20 Management Co rebilling fee – August
4 Approx interest charge on $360 principal, 12% rate - August
50 HOA late fee on August 31st (2nd month after Late On date)
20 Management Co rebilling fee – September
4 Approx interest charge on $360 principal, 12% rate - September
100 HOA late fee on September 30th (3rd month after Late On date)
45 Title Search fee (Management Co)
50 Credit Bureau filing fee (Management Co)
20 Management Co rebilling fee – October
4 Approx interest charge on $360 principal, 12% rate - October
100 HOA late fee on October 30th (4th month late)
20 Management Co rebilling fee – November
4 Approx interest charge on $360 principal, 12% rate – November
100 HOA late fee on November 30th (4th month after Late On date)
$990 Total payment due if paid on November 30th
These monthly “Test Your Knowledge” CCR messages intend to remind residents of The Springs of the Covenants, Conditions, and Restrictions (CCR’s) that apply to all Springs residents solely by our election to live in this community. The purpose of the CCR’s is to maintain specific standards for the good of us all, as articulated in their definition:
“THE SPRINGS AT STONE OAK is encumbered by these Restrictive Covenants for the following reasons: to seek to achieve the best and highest use and most appropriate development of the property; to protect lot owners against improper use of surrounding lots; to preserve so far as practical the natural beauty of the property; to guard against the erection of poorly designed or proportioned structures of improper or unsuitable materials; to encourage and secure the erection of attractive improvements on each lot with appropriate locations; and to secure and maintain proper setbacks from streets and adequate free space.”
If you are a Springs resident who has misplaced your copy of the CCR’s, or are a new resident who wasn’t provided a copy by the previous owners or your realtor, you can view (and download in Adobe Reader [.pdf] format) the complete Springs CCR’s and By-Laws at the Consolidated Bylaws and CCRs section of this website, located in the Pages & Links tab.
