Pacific Association Collections - PAC
How does our community association start the assessment collection process?
Please read and complete the Assessment Collection Instructions and provide us with the requested documentation on the form Please call with any questions. No money is required.
When homeowners fail to pay their HOA assessments, how does it affect the other owners?
(1) Reserves cannot be funded as planned leading to possible special assessments and the deferral of necessary maintenance, repairs, and improvements; (2) Insurance companies consider delinquencies to be a risk factor and something to consider when evaluating whether to increase the premiums they charge; (3) Lenders that are considering whether to make a loan secured by a unit, consider delinquencies to be a risk factor and something to consider when quoting an interest rate and terms, and (4) Potential buyers of condominiums consider delinquencies as a risk factor and something to consider when evaluating whether to make an offer and how much to offer.
Is there ever a time when it is appropriate for the board of directors of a homeowner association to inform the membership of a serious delinquency in the payment of monthly assessments?
Yes. A board may disclose a delinquency when its collection action has reached the stage of a lawsuit. When an association becomes involved in litigation, the members are entitled to notice. The filing of a suit places the matter in the public domain and is material to the financial condition of the association. The California Civil Code protects the association as plaintiff from liability for defamation or disclosure of some, but not all, private information under the "litigation privilege."
Does PAC require a deposit from the homeowner association?
Absolutely Not.
Does PAC service all of California?
Yes. PAC provides HOA collection services in all 58 counties of California. Our company was established in 1987.
How does PAC get paid?
The delinquent homeowner pays us directly in more than 95% of the collections assigned to us. Only in rare circumstances, such as bankruptcy, does the HOA pay us. See: Delinquent Assessment Collection Agreement.
Our assessment collection company makes it nearly impossible for a delinquent homeowner to enter into a reasonable payment plan with our HOA. Sometimes we think it is because they want to charge more collection fees. What is your philosophy when it comes to offering payment plans?
When the amount owed is substantial and there is a reasonable expectation that the debtor can pay the monthly payments, we encourage payment plans. We always expect the debtor to pay all accrued collection fees, interest, late charges, and any other amounts owing. There is also a small servicing fee that needs to be paid by the debtor for administering the plan.
Does PAC encourage or discourage payment plans?
We encourage payment plans when the amount to be collected is substantial. Payment plans minimize the cost of collection and increase the likelihood that the HOA will be paid every dollar owed. Our goal is to avoid a foreclosure if possible.
Can I use the proceeds of a reverse mortgage to payoff delinquent HOA assessments?
Absolutely. A reverse mortgage loan is an excellent source of funds because qualification is easy if you have sufficient equity and you are at least age 62. Most importantly, there are no monthly payments required and no credit requirements.
I have a large assessment lien on my property that I cannot payoff. I don't want my home foreclosed. What are my options?
If you are unable to pay the amount owing, you have several options: (1) Request a payment plan that you can afford that will liquidate the debt in a reasonable period of time. This may require leasing one or more rooms to roommates. (2) Sell the property, (3) Obtain a private money loan from a lender who considers only the amount of equity in your property, The Interest rate will be high, but should not exceed two years.(4) Apply for a reverse mortgage loan if you qualify. The important thing is to act quickly in order to minimize damage to your credit. Most HOA assessment collection companies will reduce the pressure on you if you list the property for sale. Call with any questions.
What is an HOA assessment fee forbearance agreement?
An HOA assessment fee forbearance agreement is a written agreement between a homeowner association and a homeowner who is severely delinquent in paying his or her assessments. These agreements consist of a payment plan that will bring the owner current within a reasonable period of time. It assumes the delinquent owner had a temporary financial problem but can now bring his or her account current. Normally, the delinquent owner must pay all past due assessments, late fees, interest, and collection costs.
Instead of hiring an assessment lien company, can our homeowner association simply file a small claims suit against a non-paying homeowner?
Yes. Filing a small claims suit is an alternative, but we believe it is an inferior alternative. If you file a small claims suit, the HOA will be required to pay filing and service fees, and appear in court. Also, if you obtain a judgment, (assuming they don't appeal the case), you will be required to prepare and file a document called an abstract of judgment. This effectively does what a recorded assessment lien does, but you are out additional dollars and your time. Also, the process of foreclosing on a judgment, as opposed to an assessment lien, is far more expensive and time consuming for the HOA.
Our HOA has an owner that is delinquent more than two months. Is there any risk to the association waiting a month or two before we start the collection process?
Very possibly. First, when an HOA board authorizes a collection action, it can easily take two months before a lien is actually recorded on the property of the debtor. The pre-lien letter or lien warning letter is very important. It encourages payment before the additional collection cost of a lien is incurred, but most importantly, a recorded lien makes the association a secured creditor instead of an unsecured creditor in the event of a bankruptcy. This can make the difference between getting paid and not getting paid. Secured creditors are paid before unsecured creditors. The cost of collection is usually paid by the debtor along with assessments owed prior the recording of a lien in more than 50% of collection cases. Associations that delay do so at their own risk.
Does PAC provide monthly status reports to HOA clients?
Yes. In addition, you may call us for updates at any time.
What exactly is an assessment lien?
An assessment lien is a legal claim against the property of another. It must be paid before the property can be sold or referenced unless the lien or liens are assumed by the buyer. Liens are almost never assumed and they are never accepted by lenders. See: Real Property Liens in California.
Does PAC foreclose non-judicially or judicially?
We use the non-judicial foreclosure method when appropriate and necessary and act as the foreclosure trustee. If we believe a judicial foreclosure is warranted, one of our collection attorneys will contact your board and will provide a no-cost consultation explaining all other options available to the HOA.
Are service members entitled to any special protections relating to evictions and foreclosures while they are on active duty?
Yes. See: Service members Civil Relief Act (SCRA).
How does an Assignment of Rents assist an HOA assessment collection company collect delinquent assessments?
An Assignment of Rents provision in CC&Rs allows the HOA collection company to collect any rents that would otherwise be paid to the delinquent owner. See: Assignment of Rents.
Does PAC monitor what action the debtor's real estate lender has taken?
Yes to the extent possible. We monitor what documents have been recorded by senior lenders. This would include any Notices of Default (NOD) and Notices of Trustee Sale (NOTS). Sometimes a lender will record a NOD or NOTS and move aggressively to foreclose. Other times, a lender will record a NOD or NOTS and do nothing more.
What happens if a bank forecloses on an owner in a common interest development while the owner is delinquent in paying his or her assessments, but the HOA has a lien on the property?
If the mortgage lender, such as a bank, recorded their loan documents before the lien was recorded (which is almost always the case), the foreclosure will extinguish any lien recorded by the HOA. However, even though the lien may be extinguished, the debt of the owner is not extinguished, thus allowing the HOA to take other collection action against the delinquent owner.
Also, if the bank holds a foreclosure sale, and the sale generates more than the bank is owed, the excess will go to the HOA if it has a recorded lien and it follows the correct procedure.
If our community association is forced to foreclose on a property, can PAC help us with our legal obligations concerning the property?
Absolutely. In fact, upon the association's request, we can probably arrange to have a buyer lined up to acquire the property before the foreclosure is complete. We can also arrange any other services that may be required, upon your request.
Can a mortgage lender require that our HOA make payments to them if the owner is not paying?
No. A senior lender may foreclose on the property if they are not getting paid, but they can never pursue the HOA for any money they are owed.
If our HOA forecloses on a property, can we retain it long term and rent it out for income?
Yes. Your association may keep it as an investment or can sell it.
How would you describe PAC's collection philosophy?
PAC is aggressive in that we do not waste time and we are able to utilize every legal remedy available. PAC also treats every debtor respectfully and we always comply with all federal and state laws.
What are some of the ways PAC collects court Judgments?
See Eleven Ways to Collect a Court Judgment.
Can the board of my condominium association levy a fine on a member of our association for failure to pay a prior fine?
No. Fines may be levied only for violating the Operating Rules or CC&Rs of an association assuming they are written so as to authorize fines.
Your association can sue a member of the association in small claims court for failure to pay a fine. The likelihood of having a judgment entered against a non paying member, which will harm their credit, may be a great incentive to pay a fine levied by the association through its board.
What is Skip Tracing?
Skip tracing involves locating people who have usually defaulted on a debt. Professionals who engage in skip tracing are known as tracers. Information of value to skip tracers include their last known address, last known phone numbers, their social security number, professional licenses in any state, vehicle license plate numbers, and their driver's license information. Our company uses professional skip tracing firms to help locate debtors.
What types of post judgment costs and interest can be collected on judgments?
Creditors are entitled to interest on unpaid judgments and most of the costs incurred to collect the judgment, such as court filing fees and levying officers' costs. See: Post Judgment Costs and Interest.
What is a Foreclosure Warning Letter?
Foreclosure Warning Letters are not required by law. They are sent to debtors as a matter of policy immediately after a board has signed a Foreclosure Resolution and Minutes. The Foreclosure Warning Letter gives the debtor 7 calendar days to respond. If a response is not received within the 7 calendar days, we then process a Notice of Default (Non-Judicial Foreclosure). Less than 1% of all collections handled by our firm go to foreclosure or into bankruptcy. The other 99% pay their debt.
Does Pacific Association Collections ever use the judicial foreclosure method when it becomes necessary to foreclose on a unit or lot?
No. We use the non-judicial foreclosure method when a foreclosure is necessary because it is faster and less costly. See: Timeline of Non-Judicial Foreclosure Process. Judicial foreclosures are started by the filing of a lawsuit seeking an order for sale and money judgment.
What exactly is a money judgment and how can a judgment be used to collect money that is owed?
A money judgment is an order from a court that a person or business entity pay the creditor holding the judgment a specific amount of money which the court awarded to the plaintiff as damages. Money judgments accrue interest until the amount owing is paid. See: Money Judgments.
What is the statute of limitations on collecting delinquent homeowner association assessments?
Unless the association's governing documents provide for a shorter period of time, the association has five years. However, the precise date that starts the five years is subject to certain circumstances. Consequently, an association board should check with an assessment collection attorney concerning the start date of the statute of limitations if it is important to know.
What is an Abstract of Judgment and how does it work to collect money that is owed?
An Abstract of Judgment is a written summary of a Money Judgment. The Abstract states how much money was awarded to the creditor, the interest rate to be paid on the judgment amount, and any court costs that were awarded. See: Abstract of Judgment.
What is a Writ of Execution and how is it used?
A writ of execution is a court order that directs law enforcement personnel to commence the taking of property from the debtor to enforce the collection of a court ordered judgment. Assets taken may include bank accounts, stock, vehicles, wages, or any other non-exempt assets.
How does a Wage Garnishment work?
A wage garnishment is a legal process in which law enforcement may take up to 25% of a judgment debtor's wages to pay a judgment creditor money that is owned pursuant to a court ordered money judgment.
What happens if a debtor transfers assets to another person in order to frustrate a collection action?
It is not unusual for a debtor to transfer assets into the name of a friend or relative before they can easily be seized by a collection company. However, unless fair market value is paid for the transferred assets and the funds accounted for, the transferee can end up having to transfer the assets to the creditor along with significant attorney fees and costs. Debtors sometimes involve their friends and/or relatives in costly litigation as a result of a fraudulent transfer.
What is the Writ of Execution and how is it used?
A writ of execution is a court order that directs law enforcement personnel to commence the taking of property from a debtor to enforce the collection of a court ordered judgment. Assets taken may include bank accounts, stock, vehicles, wages, or any other non-exempt assets.
Our HOA is master metered for water service. Is it possible to turn off a member's water if they are not paying their monthly HOA assessments?
No. The California Supreme Court has ruled that an association may not terminate a member's utility services which includes water, gas, and electricity.
What is a Debtor's Examination?
A debtor's exam is a court proceeding in which a debtor is forced to appear in court to answer questions under oath asked by the creditor, an assignee of the debt, or his or her attorney. The debtor is required to answer questions about his or her income, employment, clients, customers, spouse, assets, and provide other information that would assist the creditor in collecting the judgment. If the debtor does not appear in court, the court may issue a bench warrant for the arrest of the debtor. Debtors must bring subpoenaed documents such as paycheck stubs, bank statements, property title documents, including deeds, and other information that would assist the creditor in collecting the debt.
Debtor's exams are highly effective when combined with a subpoena. Our firm uses debtor's exams whenever appropriate to expedite the collection of a debt.
What are the primary purposes of a debtor's exam?
The primary purpose of a debtor's exam is to force a debtor into court where he or she is required to provide vital information under oath. Debtors are also required to produce documents at the debtor's exam in addition to providing testimony. The intent is to obtain information that will permit the creditor to seize valuable assets and/or income in order to satisfy the debt. Debtor's exams are invasive and unpleasant for debtors and likely to result in a settlement of the debt before assets and/or income are seized.
Our HOA has several uncollected judgments from Small Claims Courts and one from the Superior Court. Can PAC help us collect the amounts owing?
PAC can accept an assignment of the judgments and will then take every legal step available to collect the amounts owing. This service is generally offered on a percentage arrangement.
What happens if a delinquent homeowner files for bankruptcy?
While bankruptcy filings are not common, bankruptcy laws exist to protect debtors by stopping all collection action. PAC can monitor the status of the bankruptcy proceedings, or under some circumstances, an attorney can seek relief from the bankruptcy court by requesting an order permitting the HOA to proceed with a foreclosure. This is referred to as seeking relief from the automatic stay of the bankruptcy. During a bankruptcy proceeding, no collection action may be taken while the automatic stay is in force. That includes anything spoken or written that has the intention or is an attempt to collect the debt. PAC has extensive experience in dealing with bankruptcies.
When a delinquent homeowner files for bankruptcy, does it make a difference whether a lien has been recorded against the property?
It may make a big difference. In bankruptcy, a creditor, such as a homeowner association, is a secured creditor if a lien has been recorded while an HOA without a recorded lien is an unsecured creditor. Secured creditors are always paid before unsecured creditors. While recording a lien never guarantees payment, it often makes the difference between getting paid and not getting paid.
What happens when a delinquent homeowner files for bankruptcy and does not move out?
The filing of a bankruptcy petition does not guarantee the property owner that the HOA or mortgage lender will never be able to foreclose. In most cases, a bankruptcy only buys the debtor a few months before a foreclosure takes place. In addition, all assessments incurred after the bankruptcy filing date can be collected by the HOA without regard to the bankruptcy as long as the debtor is either living in the property or renting it.
Why don't more delinquent homeowners file for bankruptcy in order to avoid paying assessments?
There are several reasons. First, if a homeowner association has a lien on the property, sometimes a bankruptcy will not prevent the HOA from collecting. This is a complex area of the law which cannot be adequately addressed on this site. In addition, many people do not file for bankruptcy because a payment plan is a better alternative. It avoids a bankruptcy filing on their credit history that can continue for 7 or 10 years depending on the type of bankruptcy. Lastly, some people do not qualify for filing a bankruptcy petition for various reasons. Most delinquent owners understand that filing for bankruptcy or permitting a foreclosure to take place will affect their ability to borrow money for a car or home for many years. It will even affect their ability to lease a residence.
Can PAC help our community association establish a collection policy?
Yes. We can assist your HOA in establishing a customized written collection policy that complies with the law, is consistent with your association's CC&Rs, and that makes the collection process easier and faster. A sample collection policy has been provided on this site. We recommend that an attorney review and approve any proposed collection policy before your association adopts one.
How does the non-judicial foreclosure process work?
The process is complex, however, we have created a Timeline of the Non-Judicial Foreclosure Process which provides the major steps.
What is a Trustee Sale Guarantee (TSG) and is it necessary prerequisite to obtain one?
A TSG is a little report provided to a foreclosure trustee that provides pertinent information when foreclosing non-judicially in California. It is absolutely necessary to obtain one. See: Trustee Sale Guarantee (TSG).
Does a non-judicial foreclosure require the filing of a lawsuit?
No. No court action is required to be filed by the homeowners association seeking to foreclose non-judicially.
What is a foreclosure trustee?
A foreclosure trustee is the party that handles non-judicial foreclosures for lenders and homeowner associations. They are selected by the lender or homeowner association, but must treat all parties fairly, in accordance with the law, including the debtor.
Can a partial payment of assessments stop a foreclosure?
Homeowner associations are required to accept partial payments from owners who are in the lien or foreclosure stages of collection and, if the amount of the payment reduces the delinquent assessments to less than $1,800, the association cannot foreclose, judicially or non-judicially, unless, after receipt of the partial payment, there remain delinquent assessments that are more than 12 months past due.
It is important to note that assessment liens are not required to be released after receipt of a partial payment. Also, associations are not required to accept payment plans.
Payments made by the owner must be applied to assessments first. However, the order of application of payments can be waived by the owner in a payment plan.
Does the board have a legal duty to take collection action against delinquent homeowners?
The board has a duty to do what is in the best interest of the HOA and to treat all homeowners equally. When a homeowner is not paying their assessments, for any reason, the board must take every reasonable step to collect the money. This almost always means hiring a qualified assessment collection firm like PAC.
How does our community association start the process?
You may utilize the Collection Agreement on our website, or you may call us to get started. No money is required.
Do you have experience in collecting delinquent assessments where the owner of the unit is deceased and the property is in probate or will soon be in probate?
Yes. We have collected delinquent HOA assessments under these circumstances many times over a period of more than 33 years.
What is a fraudulent transfer and how can it effect a debtor?
Fraudulent transfers can result in a debtor being fined and possibly ending up in prison: Fraudulent Transfers
I am an owner of a condominium in Los Angeles and have reached the point where I am unable to pay my HOA fees and mortgage. What are my options?
People in your position have the following possible options: (1) Rent one or two of the rooms, (2) Obtain a roommate to share the entire unit, or (3) Sell the property and buy a less expensive home. If you decide to sell the property, we can refer you to an experienced agent who will offer you a reduced commission. Do not let late fees, interest, and collection costs erode your equity while damaging your credit score. If you cannot afford the property, it is best to sell it early in order to maximize the cash you will receive.
One of the homeowners in our community association had a lien placed on her condominium unit several years ago. The amount owing has been paid and the lien must now be removed. The company that recorded the lien is unresponsive. Can your company remove the lien?
Absolutely. Provide us with a copy of the recorded lien and a ledger showing that the owner owes no money to your HOA and we can do the rest.
What is the difference between a commercial debt and a consumer debt?
A commercial debt is a debt that exists because one business has extended credit to another business. It is commonly referred to as business to business debt. Commercial debt is unique because the Federal Debt Collection Practices Act, for the most part, does not apply to collection firms attempting to collect business debts.
Judgment Collections
PAC can collect your homeowner association's unpaid Small Claims Court and Superior Court judgments when you utilize our collection services. We collect judgments against homeowners living within your community, former owners, contractors, and vendors. Call for additional information or you may complete the Judgment Collection Data Form.
Pacific Association Collections
Pacific-AssociationCollections.com
818-991-5200