“Assessments, Collection, and Enforcements in Indiana Community Associations” – KSN attorneys Julie Jacobson and Zac Cronkhite discuss assessment collection tailored to Indiana property managers and board members in Indiana condo, homeowner (HOA, and townhome associations. They discuss topics including collection policies, liens, foreclosures, litigation options, and more. (44 mins.)

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Episode Transcription

Bernie: You are listening to the KSN Podcast and on this episode, we’re discussing assessments, collections, and enforcements in Indiana Community Associations. Welcome to the KSN podcast, where you’ll hear from KSN attorneys as they share their experience and insight on legal issues surrounding community associations, collections, property tax appeals, and landlord tenant law. This episode is an edited version of our May 4th, 2023, webinar, addressing assessments, collections, and enforcements. In Indiana Community Associations. KSN Attorneys Julie Jacobson, and Zac Cronkhite addressed assessment, collection, enforcement, liens and foreclosures, board member responsibilities and more. If your condominium, homeowner, or townhome community association has legal questions regarding assessment, collection, updating your governing documents or other legal concerns, do not hesitate to contact KSN or an experienced legal resource ready to provide you with quality advice and exceptional service. We look forward to demonstrating how we’ve earned the trust of thousands of associations since 1983. If you’d like to reach Julie or Zach or any of KSN’s experience attorneys, please call 855-537-0500. You can also visit ksnlaw.com and complete the contact form to send us a message. Thanks for listening.

Kelly: Okay, well thank you everyone for joining us this evening. Tonight, we are hosting a seminar on assessment, collections and enforcement in our Indiana Community Associations. I have the pleasure of being joined by Julie Jacobson and Zac Cronkhite and before we begin, we’re just going to go through a few items. First, some quick housekeeping we’d like to share. We do regular webinars that you can see on our upcoming events tab on ksnlaw.com/events. So, if you’re looking for some other interesting topics on Indiana Community Associations, please feel free to check out that section of our website. In addition, we focus on educating our clients, property managers, community managers, board members, and if you visit ksnlaw, you’ll find our educational booklets, podcasts, and more. So, thank you again for joining us this evening on assessments, collections, and enforcements in our Indiana Community Associations.

For those of you who might not know me, my name is Kelly Elmore. I’m a principal and manage our Indiana office located here in central Indiana and with me tonight, I have my partner Julie Jacobson, who handles our Lake County and Northern Indiana collection. So tonight, Julie’s going to be sharing quite a bit of information on what we’re seeing up in the northern part of Indiana, as well as around the state. And I’m sure many of you are familiar with Zac Cronkhite, our attorney who specializes in collection, assessment collection and enforcement for our associations here in central and southern Indiana.

Julie: Thanks, Kelly.

Zac: Thank you, Kelly. So, everybody, thank you for tuning in and to kind of get things kicked off here, collections are a big part of all of our associations. You got to do the collections in order to get the funds to come in to take care of all sorts of various things, right? So, assessments are, and sometimes those assessments are the only source for the association for funding. One consideration that we have to kind of think about is whether or not you have a mandatory or a voluntary association. Many associations are mandatory as opposed to voluntary. And so, a voluntary association is simply what it sounds like, your homeowners just choose to opt in as opposed to being automatically a part of the association by purchasing a property within the community. With a mandatory association every homeowner has a legal obligation to pay annual assessments. You hear a lot from, and I hear this in court all the time, “Well, I don’t want to belong to the association anymore. I don’t really care to be a part of an HOA so I’m not going to pay assessments, I’m not going to pay the dues to the association.” Well, that’s not a correct solution to what they’re trying to do. They have to be legally obligated to pay those assessments. And so, if a homeowner and a mandatory association doesn’t want to be a part of that association, they essentially have to sell their property, find a different home that’s not in the association. And another thing that you’ll hear often in court is, “Well, my association’s not doing X, y, or Z, and I think they should, so I’m not going to pay the assessments because they’re not doing what I think they should be doing”. Again, that isn’t a viable solution to the issue that they feel they’re facing because they have a legal obligation to pay the assessment. They have alternative means to take action as far as talking to the board, property managers and so on and so forth. But simply withholding assessments and not paying those is not a solution to that.

Julie: So, it’s a legal obligation. So, if they come in and try to use that as a defense to the court, the court will not listen to it. We have gone into court and have that argument made. We do a simple motion to eliminate and keep that testimony out of it. They cannot use that as an excuse not to pay, not in a court of law. So, I just want to be very clear, it’s not just not a solution, it’s just not legal for them to do it.

Zac: That kind of leads us into the obligations to pay. So a homeowner has essentially two types of obligations to pay assessments. Of course, they have a personal obligation. A homeowner, you know, John Jones has an obligation to pay his annual assessments to the association, as part of that the association is free to seek collections actions, to collect any delinquent assessments from that homeowner. That homeowner can be named in a small claims action to collect on that obligation. That’s the personal obligation aspect of it. Now, on the flip side of that same coin, the obligation is attached to the property. For us in the legal world, it’s called in rem, the legal world loves to use Latin. That is just means in the property. So, it attaches against the actual lot, the property, in the case of single-family homes or a condo townhouse unit, in the case of a condominium association. So, when you have the in rem portion of that obligation that attaches to the real estate, that gets into things such as liens, foreclosures, but just know, if you’re thinking about that as we talk, that there are these two types of obligations and they coexist. They exist at the same time in parallel with each other.

Julie: Keep in mind, these individuals, they’re always going to be responsible to pay and we can do it by different actions. We’re going to be talking about them, but we’re not going to get too legally on you. One of the things is, I step up in small claims courts in Lake County, I go to Crown Point, I go to Gary, I go to Hammond, I go to all of them and typically what happens is someone shows up and we have a lawsuit against them, they gets served, and if they don’t pay, then we have a personal judgment against them. And I think that’s what Zac’s trying to say in that we can go down avenues to collect that another way. And then obviously if we have a lien on the property and they try to transfer their title somehow, they will have to pay it to clear their title to actually sell, refinance, that kind of thing.

Zac: So yeah, when you’re thinking about personal obligations, just think that person, they themselves in their name is going to court. So, if Zac is named in a lawsuit that’s me personally, right? I go in under my name, the court is going to say, Mr. Cronkhite you’re here for these purposes. That’s what the personal obligation is. Again, we’ll get into the leans a little bit in more detail later. So kind of starting off with the small claims process. Now, most of our collections actions end up in small claims for a few reasons. Primarily just simply because the amounts that we are talking about are not as large and we can be in small claims in Indiana. There are benefits as I’m sure Julie can probably chime in to being in small claims. It’s a little bit more relaxed for both sides and sometimes tends to be a little bit quicker. It does tend to reach a resolution in a more expedient manner than we would if we were in, say, a full blown circuit or superior court. But when you start off with a lawsuit, small claims, whether that’s small claims, or even if say we’re dealing with a large amount that’s in a circuit or superior court, very first thing for the association to do is it sends a notice and follow up to all the owners that says, “Hey, this is the collection policy.” Many associations send in notices that say, “Hey, assessments are due on January one. Your assessment is due. Please pay it. Here are the ways you can pay that.” Then many associations will follow up with notices.

So your account hasn’t been paid in X number of days just following up, this is the amount that’s owed. And if any late fees or any additional fees have been added to that account, those are usually included in that second, notice. The details of it, am I as an association, are we going to send multiple notices? Are we going to send two or three? That’s all typically detailed within the association’s specific collection policy. The board of directors is the one that sets that. So following that collection policy, after all the notices have been issued and we’ve gone through to the end of that collection policy, whatever it says, if the homeowner still hasn’t paid the assessments, they haven’t made that payment to the association, well then at that point the account can be turned over to the attorney to file a lawsuit to try to get that homeowner to make that payment.

Zac: Once an account has been turned over to your attorney for collections action, then the property owners should speak directly to the attorney’s office regarding payment of that obligation to avoid any miscommunication or confusion cause the saying is too many cooks in the kitchen. If you get a homeowner that’s talking to the board or property manager and at the same time, there’s also talking to the attorney’s office, whether it’s staff in our office or to the attorney directly, having multiple conversations as opposed to just one direct line of communication, that increases the chance of miscommunication between everybody.

Julie: You know, I am actually reading a few chat questions as you’re speaking and a pertinent question came up. The question is, “Could we, before a small claims action, can we just hand it over to a collection agency?” It’s a really good question and you’re kind of mixing up two ideas there. You certainly always can use a collection agency, but there’s certain things you have to remember. You’re still going to have to do proper notice. You should have a collection policy, and I’m going to go into that in a little bit but the concern you have is a collection agency may take a certain amount of the overall due to the association. So the association isn’t getting all of their dues. Best way is to do the small claims because now you have a personal judgment against the owner and they’ll be responsible and obligated for it. I know a lot of people say they think it’s the easier and fast way of the collection agency. They really have no goal to collect it. They just kind of just bother your homeowners and they may not follow the fair debt policy or they may have to get a judgment anyway and they still have to go to court for it. Collection agencies are not necessarily the best route to get the judgment. It may be the best route when you have the judgment. So keep that in mind. Those are two different things.

So small claims should always be happening. And absolutely Zac, about the notices, and I’ll be reiterating this, you really should have a collection policy. If you don’t have one, you have some covenants that are going to give you some guidelines, but it’s really nice, especially when boards change or new homeowners come along when someone buys into a place, you can give them with their disclosures, the collection policy. So everybody’s up on the same page. The other thing is you can have it in your newsletter and you could have it on your website if you have such a thing for your association so that everybody’s on the same page. So nobody thinks that, oh, this person got away with not paying it for three months and they didn’t have to pay a late fee or you know, everybody’s going to be treated the same. You always can have the discretion in the board to deal with individual matters under certain circumstances, but in a general sense, everybody’s working from the same playing field and that’s really just a matter of fairness. And I think if people understand that your boards are going to take it seriously and give the management the ability to turn over these to attorneys filing the collections, you’re going to have no problem in court collecting that judgment from the judge. They’re going to show up, they’re going to get the judgment, get a payment plan, whatever it is, and you move along. You don’t want to spend a lot of time sending notices after notices after notices and not going anywhere. It’s really to get the management– Your time shouldn’t be looking to get payment, your time should be moving on and getting amenities for the association, keeping landscape, keeping the place nice. You shouldn’t be chasing people for money. That really shouldn’t be your job. So, that’s my 2 cents in this kind of part of it but I don’t think you should use a collection agency to try to get the money. Once you get that judgment, then you can go and collect on it. I hope that makes sense.

Zac: So now after we’ve sent all of the notice, whatever that is that’s outlined in the collection policy and an account’s been turned over, now we are at a point where the attorney’s office will send a notification to a homeowner. This is what we call a demand letter. That goes to the property owner and it says, here is the amount that is owed. Your account has been turned over to us in our case, KSN and to our office by your homeowner’s association for this specific amount. It also then provides them with pertinent information that’s required under what’s called the Fair Debt Collection Practices Act, that is the FDCPA for short, alphabet soup. We always have all these anagrams for laws but the demand letter is very important because we see about a third of our collections will actually resolve after the homeowners have received a demand letter. They’ve received that demand letter and then they realize this has sort of been expedited, right? I’m not getting a notice from my association telling me I need to pay this amount anymore and this is from an attorney’s office and this is a little bit more serious so I perhaps should pay a little bit more attention. And sometimes that is enough to sort of grab their attention and get them to actually reach out to our office and resolve issue then and there.

So let’s say for whatever reason a homeowner doesn’t respond to that letter, that demand letter, well next step is we just file a case in small claims court. We file that case, mow of course it depends on where you’re located, right? What county? So, like Julie, she handles lot of our Lake County things. I handle down here in more central area Marion, Hendricks, Hamilton and kind of the donut counties and as well as some of the township courts. You luckily don’t have to worry about any of that. That’s what the attorney’s office is for. We worry about where exactly does it need to be filed. We handle that. We get it filed in the correct location and really what’s the goal from that case? The goal from the small claims case is, well we want to obtain payment in full. We want the association to get everything that they’re owed and whether that’s either through a lump sum payment or an agreeable acceptable payment plan and sometimes the homeowners don’t respond to small claims and they don’t show up initially in court either. Well then that’s when the attorney can get what’s called a default judgment. With a default judgment, you’re still getting the court to say, oh, homeowner owes this amount to the association. So you still get that court order.

So whatever the court order is, whether it’s through a default judgment or an agreed judgment with the homeowner for a payment plan, once that judgment’s been obtained, then we go into what’s technically called proceeding supplemental, which essentially is just the portion of the court proceedings where we are trying to get paid from the homeowner, assuming that there’s not an voluntary payment plan entered into by that homeowner. This is where things like garnishment of wages or bank accounts would come in to play as well as any other remedies which of course vary depending on the each individual case.

Julie: Zac, that actually was a question. People were wondering, well, so what You get a judgment in small claims, that’s your meat, right? And now how are you going to feed that back to the association? And that’s really what everybody’s concerned about. Well why are we going to spend these legal fees and we’re just going to get us a piece of paper. You’re right, a judgment is just worth the paper that it’s on unless you go to the next step. This is where I was saying this is maybe when you want to bring in a collection agency cause then we’ve done like the heavy lifting for them. You’ve already got the full judgment. But if not, we can do what they call a post-judgment. We go in, we can issue wage garnishments, bank garnishments, we go in and we discover their assets, we see if there’s anything valuable. We can always record a memorandum judgment against their property. Maybe they have other property that we can file that against to record it against so that you can lien things, but you have to get that judgment first.

That’s really the most important thing because you really don’t have a leg to stand on until you have that. When I say a leg to stand on, obviously, we’re going to get into liens in very in depth, but from that individual you want that judgment because now it’s attached to that. So I hope that makes sense why we’re asking or telling you why you want to get to that small claims. In small claims the other nice thing is you may have been part of some other lawsuit in your life, maybe a divorce or something, I mean whatever it might be. There’s no discovery, there’s no pleading work, there’s not all this back-and-forth lawyering going back and forth. You may have a lawyer trying to delay it a couple of times for you. They might even want to get a trial going, it’s fine but it ends up usually just like either settling or getting it taken care of in one or two court appearances at max. So keep that in mind. That’s why you want to do a small claims. So don’t let those balances get so high that we have to file it in a different division, like a law higher amount and we don’t want to let people go too long, especially, and you keep this in mind, you got a special assessment that typically is when it gets bumped up quickly. So, if you have someone who’s already missing a few months and you know a special is coming around the corner, then you want to turn that over to your attorney because by the time you get into court that special assessment might come in, you want to make sure you’re ahead of the game. Timing’s everything. But we’ll get back to that when we were talking about collection policies and whatnot.

Zac: And one thing to consider as well is, and I may be getting well ahead of ourselves here, but there are statute of limitations, considerations for bringing certain actions that you want to consider, right? So you can’t wait 10 years to come back and say, well we’re in 2023. Can’t come back to Julie and I and say, well I’ve got a homeowner that hasn’t paid anything since 2010. We may have an issue covering the personal side in small claims, recovering that for various reasons. One, many years go by, the amount’s going to be larger but then as well there may be statute of limitations considerations that we may not be able to go back all the way to 10 years. Just something to consider that of course that’s something that us as attorneys we’re always thinking about when something comes across our desk and we’re looking at it. So now kind of to flip over to that other side of the coin and talk about liens, talk about the obligation as far as to pay assessments as it relates to and attaches to that property that the homeowner owns. In Indiana, there is what we call the HOA lien law. It allows homeowner associations to file a lien against a property and many of our property managers and probably many board members that are with us are probably familiar with these. They’ve probably used this on a few occasions but it allows you to file a lien, record that against the property, that way any assessments that are owed by that homeowner that are delinquent, it at least is secured by the property itself. And we will get into what that means, but the lien, it has to mature. So there’s a 90 day waiting period before you can really proceed on that lien with foreclosure.

Once that’s recorded, we wait 90 days. Now it’s what I call mature and then you can initiate foreclosure proceedings if you want. There’s nothing that says you have to, you have up to five years from the date that the lien is recorded to actually initiate foreclosure proceedings. Now, one thing that some people often get a little bit confused is that it’s not five years to reach the end of the foreclosure process. It is simply five years to initiate the foreclosure process. So you can four and a half years down the line initiate foreclosure. If that foreclosure takes six months, that’s okay. That’s not something that you have to necessarily worry about at that point.

Julie: Regardless if there’s going to be foreclosure, bankruptcy, whatever, if you have a delinquent owner, don’t wait to file the lien. Even if you don’t want to do a foreclosure, Zac’s going to talk about how that’s another option other than small claims. But you may not do a foreclosure on the lien. What you’re doing is you’re protecting your right to get that money should they sell their unit, should they refinance, if they try to transfer their title in any shape, way or form, a title company will look and do a title search and if they see a lien on there, they have to pay the association whatever’s due to them. Now be very careful who filed your lien for you. I have to be honest with you guys, I came into Indiana years ago and there were attorneys filing lien, some collection agencies filing lien and they only did it to the amount the person owed at the time. So, they kept charging the association every six months an updated lien, which is ridiculous. You shouldn’t be charging your association debt. You want a lawyer who knows how to draft a lien so that subsequent assessment can be collected. It’s a special way you draft that lien so that, let’s say that Billy Bob doesn’t pay his assessments for the first three months of 2023, you have us file a lien, we’ll say those a hundred dollars a month– I’m making these up, I know this is not your case, but Billy Bob, he has a $300 lien plus all subsequent occurring assessments that go unpaid.

Now, it’s not as simple as that, but basically then for five years, you are now protected should they sell it, if they refinance, if they try to transfer title and then you have another option. Here’s my thing, I’m always telling my kids, get as many options out there as you can have. Then you can pick and choose which works for each scenario. Maybe it is a small claims, maybe it is a foreclosure, maybe we are waiting for the person to sell it or refinance, but at least you have the options. If you don’t do the lien, you’re out of luck. You get nothing if they transfer title, that is a shame and it happens all the time. So that’s where you got to stay up on your account, send it over to the attorney, get that lien recorded and then they can just keep it and they can track it. And then if they keep missing it, get that collection policy out and you follow the collection policy. But it’s so key to know that you have that lien. It’s so key. If you don’t have it and then I had a person who asked the question, well we have a delinquent policy and all they do is file a lien. They don’t want to do small claims, they don’t want to do all this stuff. I get that, that’s fine. But you might be sitting there for five years or 10 years or whatever the statute of limitations ends up running out and now you don’t get that money.

Fine, do just a lien but have a collection policy should it go past a certain amount of time that you will take the next step. You don’t want to limit your options, give your board all the options, boards get elected. There’s new board members that come in. They may have a different mindset, you’re going to have managers change, things are going to change. If you have a solid policy, you can do all kinds of stuff. So don’t limit yourself but I definitely think you have to have those liens. If you don’t have liens on every one of your delinquent owners right now, that should be your Monday morning job to do. You have to go in it and get those liens and not just get a regular lien. Get the lien that I’m describing that you can get the substance accruing. And if you have liens already, make sure those liens say the right language cause I’m promising you, when I started years ago, I would say 80% of the liens were improper and people were not getting their full amount. That’s my little take on the liens. I’m going to let Zac go further, but let me tell you, and when we start talking about collection policies, I’m going to give you another big tip that you’re going to need, but that’s your tip today.

Zac: Oh, great, great point. I understand that some associations are more fiscally responsible. Most of the boards that I work with are that way and I know most of our homeowners are fiscally responsible as well. Well, part of that fiscal responsibility is that you need to collect those outstanding assessments, right? Because the more that do not pay, that increases the burden on the rest. I think it’s definitely key to keep in mind that the board has a fiduciary responsibility to ensure that we’re collecting the payments from homeowners when it’s due. You know, holding everybody accountable to the responsibilities that they’ve agreed to when they purchased a home within the association. Now, with regards to the liens, one thing to keep in mind is that the fees that an association incurs for the preparation and recording of the lien itself, that can be charged against the homeowner.

So, one thing that some of my board members tend to forget is that you can do both options, right? You can always file the lien. That’s always a possibility and then on the other hand, you can always file for the most part with some considerations. You can file a small claims action. So you can go to a judge or you can file the lien, but you can also do both. Doing both gets you covered a hundred percent across the board, right? So it kind of covers all of your bases. But if you file the lien and then you also go in front of the judge, you get to also ask for the amounts related to filing and recording that lien itself. So don’t feel like or think that that money that’s spent to record a lien is lost cause it’s not. It’s definitely recoverable against that homeowner. So just keep that in mind that there are sort of these two paths that you get to use and it’s not one or the other and definitely we recommend majority of the time that you actually do both. Again, having all of your bases covered as opposed to only being half covered is preferred because we don’t have crystal balls. I mean, I can’t ever tell you exactly what’s going to happen down the line. Sometimes a lien ends up being beneficial and is the saving grace for recovering outstanding assessments. Sometimes the small claims case is the only thing that’s needed. But I would much prefer to have the option available to us if we need it as opposed to needing it and not having it. And so, of course with liens, and I think I saw some something kind of come across regarding bank foreclosures and mortgage foreclosures.

Sometimes a mortgage company will foreclose on a property. It’s not uncommon for if a homeowner isn’t paying their association dues, sometimes they’re also not paying their mortgage. Of course the mortgage companies don’t like not getting paid. So they issue a foreclosure. Now, in that foreclosure the way, theoretically anyway, the association should be named. Now, whether the association has a lien already recorded, the lien will show up on a title search that the mortgage company presumably is doing before they file their mortgage foreclosure. If the association has a judgment in Indiana, those actually do show up on title searches in Indiana. And so, if you have either one of those that’ll show up on a title search. But most of your savvy mortgage companies will name an association, even if an association’s name doesn’t show up on a title search simply because they know that assessments may be outstanding. There just isn’t a judgment and there may not be a lien yet. So what do you do with that? Well first and foremost, turn it over to your attorney, forward it to your attorney’s office because your attorney will be able to help the association identify, okay, what’s the next logical step? What should we do? Do we need to respond or is it not worth it? Maybe perhaps you don’t need to respond. Maybe the mortgage company is foreclosing on a homeowner that owes nothing to the association, their account is completely current.

Well then there’s no reason for the association to incur the fees to file an answer in response. It wouldn’t make any sense but if that homeowner does have a balance with the association, then it would make sense to file a response. Because what happens if the association doesn’t respond and they do have an interest in the property? And this is important because if the mortgage foreclosure goes all the way through to the finish line, and let’s say the mortgage company forecloses and sells that property and the association just never responded, it loses its interest in the property. And so, you no longer have the ability to foreclose on a lien or recover any excess funds from the sale of that property. The homeowner’s personal responsibility, personal obligation isn’t touched. That’s separate. So the homeowner, even if the mortgage foreclosure goes all the way through, the homeowners never dissolved of that personal responsibility to pay. But the association’s ability to recover from the sale of the property itself, whether the mortgage company causes the sale or the association itself forecloses on its lien to trigger a sale of the property, we want to make sure we don’t lose out on that if it’s something that can actually lead to the association recovering the funds that are owed. Very important. There’s definitely something to have a discussion about with your attorney whenever you receive any sort of summons or legal complaints or anything like that.

Julie: I’ve got a couple of questions already about it. Well, what is this going to cost us? I mean, it just sounds like you keep telling us to call you guys and you’re just going to want to bill us. Rest assured, if you have a management company or you are the management company, if you’re working with a good attorney, they’ll look at the documents and they can give you a quick assessment. They’ll see if there’s equity in the house, how far behind? The first question’s going to be are they behind in the assessments? If not, you’re done. If they owe a lot, you’re done. We got to do something about it. If it’s somewhere in between, we’ll talk about it. But don’t worry about the legal fees because generally, I’m not going to say a hundred percent all the time, generally that comes back to the homeowner that has to pay that. And if you properly filed that lien and you’ve properly done the small claims and now you go to foreclosure, yes, they foreclosures tend to extinguish as a lien, but now you have like a personal judgment. So you’ve, again, what Zac and I are constantly reiterating to you is have all the options. You don’t have to pick one or the other.

Remember we’re here as a team with you. We want to make sure your amenities, your landscaping, your associations are beautiful. You want to keep those homes at the highest market value. That’s an important thing here. Associations shouldn’t just be there to collect dues. The associations should be there to keep the community beautiful, keep it a nice place to live, keep it desirable so that when a buyer comes in, it’s a great place to move into. That’s the whole point of an association is not to collect dues. That shouldn’t be the one thing to be worrying about. You should have a policy in place. You should have liens going on delinquency and moving along and that should be your least of your worries. That should be someone else’s job, the attorneys and getting that collected for you. So people are asking, well what is this going to cost me? I’m going to tell you guys up in Lake County, we do a pretty fast job. I try to do volume based. So I do a bunch at the same time. I can’t give you an exact quote, you want to email me, I’ll get you fee schedules, but we don’t charge you by the hour. We charge you either flat for the case itself or we’ll do steps. We’ll charge you just for the notice and if you get paid off, you don’t have to worry about paying us any more money.

We’re not billing you an hourly rate. It’s kind of like pieces. It’s a fair and quick and the judge sees it, and I have yet not once has my legal fees have been reduced. That’s how reasonable they are. Someone wants some specific number. I can just tell you most of my cases are under $600. That makes you feel better. And the homeowner has not yet not paid those for me. So keep that in mind. So don’t just go, all these lawyers are just looking for money. We’re trying to get you to have the most financially stable community so you can get all your projects done, have your managers paid, all your insurance are paid, your D&O policies, all of those things. So there’s a lot that goes to this. But keep in mind, don’t get lost in the weeds with how much is it going to cost cause you’re saving a penny and lose a pound. That would be my grandmother’s little saying. Let’s keep in mind, what is we taking away here? You have plenty of options to collect, there’s ways to do it. It’s streamlined. We got to take this off the board’s back and off the manager’s back and we want to make sure your association is [Inaudible: 35:54]. You don’t want to spend, having your time being in the red and not being able to pay your vendors. You don’t want to like say, oh, we can’t do parkway trees this week, or we can’t clean the balconies, or the elevator’s not going to work or whatever it is because we don’t have a good collection policy. I’m sorry, I know we’re talking about bank foreclosures. Everybody wants to know, well, do you owe more to the bank. Listen, it’s a game of equity, it’s a game of what’s owed? What have you done so far? So if you have an individual case that you’re concerned about, reach out to one of us. This is what Zac and I do.

Zac: That’s important to remember is that when you’re talking about responding to a mortgage foreclosure or even initiating a foreclosure on the association’s lien, those attorney’s fees are going to be recoverable from the homeowner. So the homeowner is going to be responsible for those. One thing that I will point out is that foreclosures have been, because of the way the housing market has been, prices have kind of increased. It’s caused this surge in equity in the houses and properties and with that, it increases the likelihood that an association can recover from foreclosure, file a lien and just go that way. Maybe it’s not worth it to continue to drag it out and fight it in a small claims case because the homeowner refuses to show up. Or maybe they don’t have garnish income that we can kind of get to but this might change in the future, but for now, foreclosure is very viable option for every association.

Julie: Yes, and based on the questions that I’ve been reading and answering, let me talk about the hot topic. Remember we have options. You have a lien so that if they sell, refinance, blah, blah, blah, we have a small claims, so it’s always after a person later and they’re bank garnishment and then there’s the HOA lien foreclosure. It’s a lot like a foreclosure and like Zac was saying the foreclosures actually are working well for associations in Indiana, but everybody’s asking me what’s going on. What if they filed bankruptcy? I’m going to tell you this right here, right now, if some lawyer tells you or some manager or some board member tells you, oh, they filed bankruptcy, write off that debt because bankruptcies don’t work exactly like that. There are bankruptcies where the association will actually get paid because they’ll be required to pay if they properly filed the lien, keep coming back to that lien, and that’s if they file a chapter 13. Let me tell you the difference between a chapter seven and a chapter 13. I can get all legal with you, but I’m not. Chapter 17 is when you throw a match and you walk away from all your stuff. Chapter seven is the one that everybody thinks everybody’s filing, no one’s filing Chapter seven if they’re living in a community, they got kids or they’re living and they own something. They don’t want to file a chapter seven cause they lose everything. I have been doing this job for 22 years. I will tell you chapter sevens only happen after the recession. People went through foreclosure, they didn’t have homes, then they decided to wipe themselves clean. That’s it. Chapter 13 on the other hand, is a restructuring of their debt and if you have a secured lien and done it properly, they actually put the amount that’s owed to the association into the pile of money that gets paid back to the association under chapter 13.

So instead of thinking like, oh, we’re out of luck, you’ve got to think this is actually a positive thing for you and what if they stop paying your assessments after they file a bankruptcy, guess what happens? You get to go in there and modify their bankruptcy and they get no more protection from bankruptcy. So legal tools associations have that can get their money to get their community back to working order. So don’t just assume, throw up your hands, oh, they’re in foreclosure or they’re in bankruptcy, we can’t do anything about it. If you have a proper collection policy, you actually can address the bankruptcy. You could actually address a foreclosure, and what to do in each situation. So, please don’t just assume there’s no way to recover or it’s all about legal fees. That’s not the way to be looking at this. Guys, just email us. This is all we do. Our firm has been around 40 years this may. Just reach out to us. That’s what we’re here for. We’re here to build relationships with our communities, with our boards, with our managers, and you’ll see that your financial health will only get better, and we can help you. We’ll draft those collection policies. We even have a program where you pay $300 a month and it covers 15 services from reviewing every one of your contracts to writing amendments, writing all your rules, writing your collection policies, doing your maintenance charts, doing all the responsibilities, and you don’t pay hourly rate. You pay literally one fee a month. I love having my associations that I’ve had since 2001 and are still with us here in 2023. It’s a wonderful thing and I love watching the families grow. So don’t hesitate to reach out to us. Please go onto our website, you’ll see our website, you will go into the library. We have more information there. There is so much information and you can learn so much, right?

Zac: The more that we can help board members understand and property managers too, understand this, then each community’s going to get just a little bit better, a little bit more savvy and like to equip all of my board members with as many tools as I can, right? Because not every situation requires a hammer.

Julie: Absolutely. And guys, remember, these are your neighbors. Maybe they’re struggling or whatever and if they actually know what the rules and the boundaries are, they may be like, okay, this is serious and I’m going to say, there are some owners who are just going to be always the delinquent ones or always going to try to work the system or do something like that. I get that. We deal with that too. But don’t fret, you have people on your side and don’t think, and we’re not out to get the neighbors. Like that’s not our goal. Our goal is to make this community financially healthy so you can get your amenities, have a nice reserve, have your documents all updated so that when, and if someone sells a home, they get the best price they can get for it. That’s really what this comes down to, guys, that’s really it.

Bernie: Thank you for listening to our KSN Webinar presented by attorneys Julie Jacobson and Zac Cronkhite. If your condominium, homeowner, or townhome Community Association has legal questions regarding assessment collection, updating your governing documents or other legal concerns, do not hesitate to contact KSN or an experienced legal resource ready to provide you with quality advice and exceptional service. We look forward to demonstrating how we’ve earned the trust of thousands of associations since 1983. If you’d like to reach Julie or Zac or any of KSN’s experience attorneys, please call 855-537-0500. You can also visit ksnlaw.com and complete the contact form to send us a message. Thanks for listening.

Outro: The music for this show is provided by podcastthemes.com. Please note the material contained on the KSN podcast is for informational purposes only and does not constitute legal advice. No attorney-client relationship is established by your review or receipt of the information contained on the KSN podcast. You should not act on the information discussed on the KSN podcast without first obtaining legal advice from an attorney duly Licensed to practice law in your state. While KSN has made every effort to include up-to-date information on the KSN podcast, the law can change quickly. Accordingly, please understand that information discussed on the podcast may not yet reflect the most recent legal developments. Material is not guaranteed to be correct, complete, or up to date. KSN reserves the right to revise or update the information and statements of law discussed on the podcast at any time without notice and disclaims any liability for your use of information or statements of law discussed on the podcast or the performance of the podcast generally. The KSN Podcast may be considered advertising in some jurisdictions under applicable laws and ethical rules or regulations.


Please note the material contained on the KSN Podcast is for informational purposes only and does not constitute legal advice. No attorney-client relationship is established by your review or receipt of the information contained on the KSN Podcast. You should not act on the information discussed on the KSN Podcast without first obtaining legal advice from an attorney duly licensed to practice law in your State. While KSN has made every effort to include up-to-date information on The KSN podcast, the law can change quickly. Accordingly, please understand that information discussed on the podcast may not yet reflect the most recent legal developments. Material is not guaranteed to be correct, complete, or up to date. KSN reserves the right to revise or update the information and statements of law discussed on the podcast at any time, without notice, and disclaims any liability for your use of information or statements of law discussed on the podcast, or the performance of the podcast generally. The KSN Podcast may be considered advertising in some jurisdictions under applicable law/s and/or ethical rules/regulations. © 2023 Kovitz Shifrin Nesbit, A Professional Corporation.