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Things can get ugly when homeowners (members) fail to pay their assessments.
BUT every common interest community (CIC) should have a collection policy that standardizes the approach to resolving past due accounts. Assessment revenue is the lifeblood that funds your operating expenses! Please do not assume that you need to hire an attorney to collect on behalf of your community. Attorneys are not debt collectors. At least consider an approach where you pay nothing up front.
Attorneys acting on behalf of secured parties in non-judicial foreclosure proceedings are not debt collectors. Reference this blog re: Obduskey vs. McCarthy & Holthus LLP decided March 20, 2019 by the US Supreme Court. Association managers aren't debt collectors, either according to Cornell et al v. HOA Management, Inc. TLDR: while the Fair Debt Collection Practices Act and state collections procedures are relevant in certain cases, courts have clarified (and potentially narrowed) the scope of that statute.
Accurate records make all the difference. See Villa Marina Association Of Apartment Owners v. Collins (Washington Court of Appeals - October, 2021)
State statutes vary greatly regarding collections and foreclosure.
In Washington State, 2025’s SB5686 provides critical updates related to delinquency, collection and foreclosure practices. Previously, WA House Bills 1482, 1349 and 1686 became effective in May 2021 and HB1636 made further changes effective July 2023 for January 2024 and 2025. Reference RCW 64.90.485, 64.34.364, 64.38.100 and 64.32.200.
Subject to statute and governing documents, associations are generally entitled to recover any costs and reasonable attorneys' fees incurred in connection with the collection of delinquent assessments, whether or not such collection activities result in a suit being commenced or prosecuted to judgment.
The prevailing party is also entitled to recover costs and reasonable attorneys' fees in such suits, including any appeals, if it prevails on appeal and in the enforcement of a judgment.
What are reasonable attorneys' fees? In Washington State, reasonable attorneys' fees are elucidated by RCW 4.24.005.
Lien Foreclosure Requirements (WA State)
Lien Foreclosure Requirements (WA State)
Reference RCW 64.90.485, RCW 64.34.384, RCW 64.38.100, RCW 64.34.200 (effective to January 1, 2025 and after January 1, 2025)
Recently updated requirements to foreclose a lien in Washington state (certain adjustments effective January 1, 2025) are as follows:
(a) The unit owner, at the time the action is commenced, owes at least a sum equal to the greater of:
(i) Three months or more of assessments, not including fines, late charges, interest, attorneys' fees, or costs incurred by the association in connection with the collection of a delinquent owner's account; -OR-
(ii) $2,000 of assessments, not including fines, late charges, interest, attorneys' fees, or costs incurred by the association in connection with the collection of a delinquent owner's account;
(b) At or after the date that assessments have become past due for at least 90 days, but no sooner than 60 days after the first preforeclosure notice required in subsection (21)(a) of this section is mailed, the association has mailed, by first-class mail, to the owner, at the unit address and to any other address which the owner has provided to the association, a second notice of delinquency, which must include a second preforeclosure notice that contains the same information as the first preforeclosure notice provided to the owner pursuant to subsection (21)(a) of this section. The second preforeclosure notice may not be mailed sooner than 60 days after the first preforeclosure notice required in subsection (21)(a) of this section is mailed; [Reference mandatory disclosure language in RCW 64.90.485(21)]
(c) At least 90 days have elapsed from the date the minimum amount required in (a) of this subsection has accrued; and (d) The Board approves commencement of a foreclosure action specifically against that unit. Every aspect of a collection, foreclosure, sale, or other conveyance under this section, including the method, advertising, time, date, place, and terms, must be commercially reasonable.
(d) The board approves commencement of a foreclosure action specifically against that unit.
Every aspect of a collection, foreclosure, sale, or other conveyance under this section, including the method, advertising, time, date, place, and terms, must be commercially reasonable.
What's commercially reasonable? Reference this blog about the Delaware Supreme Court decision from March 2017 in The Williams Companies, Inc. v. Energy Transfer Equity, L.P.
Multiple states prohibit foreclosing liens related to fines, late charges, interest and other fees or costs (see above example). Texas law prohibits foreclosing liens for amounts that aren't tied to assessments, so this case had a peaceful resolution after filing 84 exhibits and motions. Each party paid their own attorneys' fees. QUACK!
Read CIC Info Bytes to learn how one association steered itself into the lagoon!
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