By: Christopher R. Moore, Esq.

The Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., regulates “debt collectors” who regularly attempt to collect debts owed to third parties by consumers.  15 U.S.C. §1692a(6).  The law requires certain notices to debtors, prohibits certain forms of communications, and generally bans harassment or abusive conduct by debt collectors toward consumers.  15 U.S.C. §§1692b and c. 

HOA fees are considered “debts” under the FDCPA. Ladick v. Van Gemert, 146 F. 3d 1205 (10th Cir.1998). And a member of a homeowners association who owes a debt to the association is considered a “consumer” protected by the FDCPA.  Thies v. Law Offices of William A. Wyman, 969 F. Supp. 604 (S.D. Cal. 1997).  However, as long as the association is attempting to collect the debt on its own behalf, it will not qualify as a “debt collector” and therefore not be regulated by the FDCPA. 

Where the FDCPA kicks in is when the HOA turns unpaid assessments over to an attorney’s office or debt collector for collection, including lien-filing if intended to result in payment from the member.  If a law firm attempts to collect debts as a regular part of its practice, the firm is a “debt collector” under the FDCPA.  See Fuller v. Becker and Poliakoff, 192 F. Supp. 2d 1361 (M.D. Fla. 2002).  Thus, the firm has to comply with all FDCPA provisions governing debt collection.

As a regulated debt collector, an attorney hired by an HOA is limited by the FDCPA in the actions he or she can take on the association’s behalf.  Along with the prohibitions against harassment and misrepresentations, “debt collectors” are also required to make specified disclosures, prohibited from collecting fees not expressly allowed by agreement or law, and limited in how they can communicate with third parties about the debt.  See 15 U.S.C. §1692d-f.      

Whether real estate management companies working for associations are regulated by the FDCPA is something of a gray area.  The statute’s application comes down to the “principal purpose” of the company.  If a management company spends most of its time and effort on collecting unpaid assessments, it is probably a “debt collector” under the FDCPA. 

But if its primary focus is on managing association facilities - and collecting delinquent assessments is only an incidental part of its duties - then it is probably not governed by the FDCPA.  See e.g., Alexander v. Omega Management, Inc., 67 F. Supp. 2d 1052 (D.Minn 1999); Franceschi v. Mautner-Glick Corp., 22 F. Supp. 2d 250 (S.D.N.Y. 1998).

 

Enforcement Agencies

If a debt collector violates the law, consumers can file a complaint under the FDCPA or report the conduct to the following agencies:

  • Consumer Financial Protection Bureau (CFPB) – The agency enforces federal consumer financial laws, including the FDCPA and The Servicemembers Civil Relief Act (SCRA). The agency provides a wealth of information, tools, and resources designed to help Americans overcome financial challenges.

  • State Attorney General’s Office - You can also visit your state’s Attorney General’s website to find more information about local debt collection laws or to file a complaint against a debt collector who is in violation of the FDCPA.

 
Federal Laws Americans with Disabilities Act of 1990 Fair Housing Act Freedom to Display the American Flag Act Over-the-Air Reception Devices Rule Servicemembers Civil Relief Act United States Bankruptcy Code
 
 

Things to Remember

  • The Fair Debt Collection Practices Act protects consumers from unfair or deceptive collection practices by regulating when, how, and how often a debt collector can contact the debtor to collect a debt. For this reason, it is important to read and understand the FDCPA or consult with a qualified attorney.

  • Consumers have rights. If a debt collector violates the FDCPA, the consumer can file a complaint against the debt collector.

 

FILE A COMPLAINT

Homeowners can file a complaint against a debt collector who violates the FDCPA with the following agencies:

Alabama Alaska American Samoa Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Guam Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Puerto Rico Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virgin Islands Virginia Washington West Virginia Wisconsin Wyoming
 

The U.S. Court of Appeals for the Ninth Circuit held that HOA collection letters must meet the "Least Sophisticated Consumer" standard.  Link to Court Opinion.

 

DISCOVER MORE

Educational HOA articles. Giving you facts, not opinions.
Step-By-Step Guide To The HOA Assessment Collections Process

When you purchase a property in a community with a homeowners’ association, you’re also acquiring the obligation to pay regular assessments. Unfortunately, though, homeowners are sometimes financially unable to pay assessments. Homeowners faced with potential collections action must understand how the HOA collections process works and the legal rights and redress available for both homeowners and the association. This guide will help all community members, including the board, resolve conflict, and avoid escalation.

HOA Fees: What Happens When Members Fail to Pay?

HOA fees are the costs assessed to all property owners for items such as lawn care, snow removal, utilities, property maintenance, common area maintenance, security and similar items.  Some of the more expensive common area maintenance items can include swimming pools and equipment that is located in a community building.  The amount and type of items that are included in HOA fees will vary depending on the nature of the property, its location, and how extensive the services are that are provided within the context of the community. 

The Service Member’s Civil Relief Act (SCRA) Applies to Homeowners' Associations

Given the sacrifices of our men and women in uniform, it is only right that the Congress passed a law in 2003 to assist military members with collections and foreclosure issues. Under the Servicemembers Civil Relief Act (SCRA), all creditors have limitations on debt collections against active duty military members. These limitations include the temporary suspension of judicial and administrative proceedings and transactions that may affect the civil rights of military members during their service. This article will examine in detail the protections afforded by the law to military members who own properties within homeowners' associations.  

Important Facts About HOA Liens & Foreclosures You Should Know

The right to record liens, and to foreclose on unpaid liens, is perhaps the most powerful tool homeowners’ associations have to enforce assessment obligations.  State HOA laws are designed to allow associations to recover unpaid fees without undue effort and expense while protecting homeowners from overly aggressive associations by requiring strict compliance with statutory procedures and ample notice to homeowners. 

Understand The Law That Protects Owners From Abusive HOA Debt Collection Practices

In 1977, Congress passed the federal Fair Debt Collection Practices Act (the “FDCPA” or “Act”) to prevent abusive, deceptive, and unfair debt collection practices by debt collectors. The act prohibits debt collectors from harassing consumers or using deceptive conduct when attempting to collect a debt. Homeowners or condominium maintenance assessments are subject to the FDCPA, therefore, the association’s debt collectors must follow the law when attempting to collect past due fees from homeowners.