Example: Let’s say that homeowners are assessed a $200 per year HOA fee in their community. About 30 days after the Assessment due date, homeowners will be charged a late fee and interest.
For example: If the due date is June 1. Assuming a $0 balance prior to the assessment, the homeowner owes $200. On July 1st the assessment is overdue and a late fee of $20 and interest at the annual rate of 10% ($1.67 per month) will be charged to accounts that have not paid. Now this homeowner owes about $221.67.
About 30 days later, if the balance has not been paid, the delinquent account will go
into collection and a $10 collection fee will be charged to the account. In this example, on August 1, the account will go into collection and the homeowner owes about $233.34.
Each time the homeowner receives a collection letter, $10 is charged to the account.
Let’s say the homeowner receives a second collection letter on September 1st. Now,
the homeowner owes about $245.00.
In this hypothetical example, the debt continues to age and on January 1st the account rolls over to the attorney for collection. NOTE: Fees in this example are typical, however, they in no way constrain collections from adjusting their fees. The attorney will set up the account and send the first demand letter. The cost to the homeowner is about $35. Now, the homeowner owes about $280.00.
If there is no response to the first letter, the attorney will send a second demand
letter. Now, the homeowner owes about $308.65 and if no response, a lien is placed on the owners’ home.
Interestingly, many homeowners decide to pay $308.65 and have an account paid in
full. But…they also have to pay to remove the lien.
If, in our example, the homeowner does not pay $308.65, they will move to the next
stage. The homeowner will receive notice of an impending suit and will now owe
about $495.40. If our example homeowner does not pay $495.40, they will move to the next stage…Lawsuit.
The moment the lawsuit work begins, the homeowner is incurring legal fees
associated with a lawsuit. When the complaint is filed, our example homeowner will owe 1) the initial HOA assessment, 2) legal fees, 3) court fees and 4) service costs, a total of about $1,845.40.
Remember our homeowner only owed $200 in the beginning of this example.
At any point our homeowner can submit the total amount owed, $1,845.40. However, there will likely be additional legal and court fees to legally stop the lawsuit.
Let’s say our homeowner does not pay the $1,845.40 that they owe, and they do not
answer the court they now owe about $2,545.40. Wow!
More than 10 times the original assessment!!
This example will end here. Why? Because the legal process becomes more complex
and even more costly as we keep going. The homeowner continues to fall into debt or closer to foreclosure if they cannot pay. It is just too distressing to continue.
This example is for general educational purposes and is in no way related to an actual person or community. The sole purpose is to inform homeowners of a typical collection process.
West River Place Homeowners Association 