Michigan HOA Lawyers

Michigan HOA Lawyers For Homeowners Association Collections

A Michigan homeowners association, often referred to as an “HOA”, must collect assessments from HOA members to provide essential services and fund HOA operations. The governing documents of a homeowners association typically require all property owners to pay HOA dues. Whenever a homeowner fails to pay their HOA dues, the other homeowners are unfairly forced to shoulder the burden of homeowners association’s operating costs. Keeping up on HOA Collections is essential for a well-run homeowners association. At Hirzel Law, PLC, our Michigan HOA Lawyers can help collect delinquent HOA dues.

Michigan homeowners associations must be diligent in pursuing delinquent HOA dues. An essential part of HOA collections is having a collection policy. As recommended by the Community Associations Institute, having an HOA collection policy in place ensures that all members of the homeowners association that become delinquent are treated fairly and that the HOA collections process is efficient.  Similarly, enforcing HOA collection policies ensures that HOA delinquencies do not continue to grow indefinitely.  A high HOA delinquency rate may impact the ability of the HOA to provide essential services.  Similarly, a high HOA delinquency rate may negatively impact property values as banks may not provide loans to potential purchasers if the HOA’s delinquency rate is too high.

While homeowners associations can send payment reminder letters to collect HOA dues, Michigan law does not permit non-attorneys, such as board members, to perform legal services on behalf of a nonprofit corporation, such as a homeowners association.  Accordingly, it can be difficult for homeowners associations to collect delinquent HOA dues without professional help.  Accordingly, if the initial payment reminders do not result in payment, a homeowners association should involve experienced HOA lawyers to assist in collecting delinquent HOA dues.

How to Collect Delinquent HOA Dues

While the process for collecting delinquent HOA dues is ultimately governed by restrictive covenants and the HOA’s collection policy, the typical process for HOA collections is as follows:

1. The HOA member becomes delinquent by failing to pay their HOA dues in a timely manner.
2. The HOA sends a reminder letter advising the homeowner that the payment is delinquent and that it will be turned over to the HOA attorney for further action if the owner fails to pay their delinquent HOA dues.
3. If the homeowner still fails to pay their delinquent HOA dues, the homeowners association provides a ledger to the HOA attorney that identifies the delinquent HOA dues, going back to a zero balance, along with interest and late fees.
4. The HOA attorney sends an initial demand letter to the homeowner requesting payment of the delinquent HOA dues.  In many cases the homeowner will enter into a payment plan with the HOA to pay the delinquent HOA dues.
5. The HOA attorney records an HOA lien for delinquent HOA dues until the delinquent HOA dues are paid in full to ensure that the HOA’s lien will not lose priority over other liens. 
6. The HOA attorney performs research as to whether the HOA lien will have priority over other prior recorded interests against the property and provides a recommendation to the HOA as to the available options to collect the delinquent HOA dues.
7. The HOA proceeds with a foreclosure by advertisement of the HOA lien or filing a lawsuit seeking judicial foreclosure and a money judgment.
8. The HOA receives title to the unit if it submitted a credit bid at the HOA foreclosure sale or it receives proceeds from the HOA foreclosure sale to apply to the HOA delinquency.  Alternatively, the HOA obtains a money judgment and collects on the money judgment until the delinquency is paid in full.

While the above process for HOA collections is common, please keep in mind that every HOA collection case is different and Hirzel Law creates a plan for each matter based on the facts and circumstances of that case.

Can the HOA Recover Attorney’s Fees for Collecting Delinquent HOA Dues?

In most cases, the restrictive covenants, declaration, or deed restrictions allow the homeowners association to recover attorney’s fees and costs incurred in collecting delinquent HOA assessments. Given that the attorney’s fees and costs are typically added to the unpaid HOA dues that are paid by the delinquent homeowner, homeowners associations should be diligent in taking action to collect delinquent HOA assessments.

How Will the HOA Know the Status of its Collection Matters?

At Hirzel Law, we offer an online collection portal for Michigan homeowners associations.  The online collection portal allows a homeowners association to view demand letters, HOA liens, HOA foreclosure documents and more.  In addition to the HOA collections portal, Hirzel Law can prepare monthly status letters for clients if requested to do so in order for the homeowners association to review the status of its collections at board meetings.

HOA Lawyer or HOA Collection Agency: What to look for in deciding how to pursue HOA Collections

1. Fees.  The HOA Lawyers at Hirzel Law charge flat fees for many of its HOA collections services.  As indicated above, in many cases, reasonable flat fees, hourly attorney’s fees and costs may be charged back to the delinquent owner if permitted by the HOA’s restrictive covenants.  The attorney’s fees and costs are charged on a monthly basis. Client satisfaction is paramount at Hirzel Law.  In the unlikely event that a homeowners association is dissatisfied with the progress of its HOA collections, the HOA can leave at any time without having to pay additional charges. In contrast, we have reviewed some HOA Collection Agency contracts that require a homeowners association to pay additional fees if they terminate their relationship with the HOA Collection Agency.  While some HOA Collection Agencies advertise that they do not charge fees unless they collect, this is not always the case.  Accordingly, it important to carefully review an HOA Collection Agency contract to understand how the HOA Collection Agency, how often the HOA will be updated on the fees incurred and if there are additional fees that will be owed if the HOA becomes dissatisfied and terminates the HOA Collection Agency because HOA collections are not progressing.
2. Licensing Requirements.  In Michigan, a lawyer is required to obtain a law degree, which typically requires at least three (3) years of training in law school, after completing college, in addition to passing the bar exam and a separate ethics exam.  In contrast, a person may obtain a license to operate an HOA Collection Agency if they are 18 years old, have a high school diploma or the equivalent of a high school education, they have 6 months of experience in collection accounts and they have passed the state licensing exam.
3. Risk.  When deciding whether to use an HOA Lawyer or an HOA collection agency, a homeowners association should do research to determine how often the HOA Lawyer or HOA collection agency has been sued and how often their HOA clients have been sued as a result of the collection methods employed.  This is something that can typically be determined through a google search, but a homeowners association should always ask the HOA Lawyer or HOA collection agency about how many times they have been sued and how often their clients are sued for collection related issues.  If a homeowners association is forced to defend claims related to debt collection practices, it may greatly increase the overall legal expenditures of the homeowners association.
4. Scope of Services.  HOA lawyers are permitted to practice law and can perform a wide range of collection methods, such as sending a demand letter, recording an HOA lien, providing legal advice on the different options to collect delinquent HOA dues, foreclosing on an HOA lien, obtaining a money judgment, or collecting a money judgment.  Also, it is not uncommon for a delinquent homeowner to also be in violation of other restrictive covenants, such as architectural rules, and an HOA lawyer is well suited to handle these types of “mixed issues” and can provide one stop shopping for all of the HOA’s legal needs. In contrast, an HOA collection agency is not permitted to practice law and is precluded from taking certain collection actions.  MCL 339.915a prohibits an HOA collection agency from engaging in a wide variety of collection activities, including providing legal advice or engaging in the practice of law.  Similarly, if a delinquent owner has violated other provisions of the restrictive covenants, an HOA collection agency would not be able to directly handle this matter unless it engaged an HOA lawyer.

The Right Michigan HOA Lawyers for Your HOA Collection Needs

At Hirzel Law, we offer an online collection portal for Michigan homeowners associations.  The online collection portal allows a homeowners association to view demand letters, HOA liens, HOA foreclosure documents and more.  In addition to the HOA collections portal, Hirzel Law can prepare monthly status letters for clients if requested to do so in order for the homeowners association to review the status of its collections at board meetings.

Contact Our HOA Lawyers for Help with HOA Collections

Collecting delinquent HOA dues is not fun for homeowners associations, but it is necessary to provide required services. At Hirzel Law, PLC, our Michigan HOA lawyers can help your homeowners association resolve its HOA delinquency issues. We stand by our clients, offering the highest quality legal representation and promptly responding to our clients’ needs.

Contact Hirzel Law online or call 248-986-2921 (Farmington) or 231-486-5600 (Traverse City) or 616-319-9964 (Grand Rapids office) to see how our Michigan HOA lawyers can collect delinquent assessments on your Michigan HOA’s behalf.

Speak With a Qualified Attorney Today!