Assessment Payments: If A Unit Owner Is Delinquent, You Can And Should Request Payment From The First Mortgagee Bank

If you have purchased a condominium or property in an HOA, one of the documents you may be required to sign in connection with your loan is a “Condominium Rider or a Planned Unit Development (PUD) Rider.” This rider is an attachment to the document recorded in the land records to secure the note given by the lender for your purchase.  In most states including Florida, it’s called the Mortgage.

One of the most important items contained in the Condominium Rider/PUD Rider is the information regarding the maintenance fees for that particular community association. It is very important to the lenders that these fees are paid because they have an interest in the condominium unit or HOA property.  It is especially important to them if the unit has equity, because the community association has the right to foreclose on the title for non-payment of maintenance fees.

In the Condominium Rider/PUD Rider, you agree to conform to the condominium or HOA rules, very significantly important is paying all dues and assessments that are charged by the community association.  If you do not pay these dues and assessment payments, the lender may pay them, and any amounts that it pays on your behalf will be tacked on to the loan amount to be paid back by you, with interest.

Here is a direct quote from one such rider:

“If Borrower does not pay condominium dues and assessments when due, then Lender may pay them. Any amounts disbursed by Lender under this paragraph F shall become additional debt of Borrower secured by the Security Instrument. Unless Borrower and Lender agree to other terms of payment, these amounts shall bear interest from the date of disbursement at the Note rate and shall be payable, with interest, upon notice from Lender to Borrower requesting payment.”

All of this is important, because when a unit owner becomes delinquent it is imperative for the association to pick a recovery solution that will seek to recover and bring in these funds from all possible sources.  Community Association attorneys will typically send a notice of intent to file a lien, file the lien, and then they may or not foreclose on the unit.  That is a “legal process” that is not necessarily “collections centric.”  An effective collections solution would seek to recover these amounts from all parties who are responsible or may be willing to accept said responsibility, and in the case of the Condo/PUD Riders, the banks have provided a path for associations to collect their maintenance fees directly from them.  That is why community associations should consider engaging a collection agency over a community association attorney for their collection issues.  There are many paths to take in order to recover delinquent assessment fees and the best course of action is to hire a specialist to take on this task.
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