Dealing with delinquent owners and pursuing collection actions for unpaid assessments is a nearly constant part of being a community association board member. Likewise, as a firm representing community associations, we work routinely with our clients to ensure collection actions are proceeding in a fair, efficient, and straightforward manner.  As associations pursue collection actions, delinquent owners will frequently propose payment plans or other settlement proposals, and we frequently receive questions from board members concerning what, if any, obligations associations have to settle delinquent accounts or to enter into payment plans with owners. This post will briefly discuss these matters.

            As a starting point, associations typically do not have a legal obligation to enter into payment plans or settlements with delinquent owners, but, under Ohio law, associations cannot reject an owner’s tender of a payment that satisfies all past due amounts—which would include any attorney fees and court costs that may be owed. At first blush, one may ask why any board would ever even want to reject payment in full, but I have seen occasions where a particularly troublesome owner submits payment in full on the cusp of a foreclosure sale, and the association would much rather have the owner gone than have the owner’s money! Regardless of how difficult an owner may be, however, Ohio law does protect an owner’s right to “redeem” their property from any foreclosure action through a payment in full of the amounts owed to an association—so long as the payment is made before any foreclosure sale is confirmed by the court. Associations, therefore, cannot reject such payments. 

            Moving beyond the acceptance of full payments, boards have a great deal of discretion in settling delinquent accounts and entering into payment plans with owners.  Again, this means that boards are under no legal obligation to accept settlement offers or to enter into payment plans if they do not wish to. That being said, given the community nature of associations and the realities of collection litigation, settlement agreements often provide a way for associations to secure repayment of delinquent amounts in an amicable fashion and can reduce litigation costs and risks. Accordingly, we typically encourage our clients to pursue reasonable settlements or payment plans when it makes sense for the association. Further, we work with our clients to ensure that any such agreements do provide adequate protection for the association in the event an owner defaults.

            While most of clients do their best to work with delinquent owners, financial realities do also place limits on the frequency and terms an association can agree to. Further, the circumstances surrounding some owners and some delinquencies sometimes simply do not warrant sympathy or present reasons for the board to do anything except demand payment in full.  As board members know, the operation of the association depends on owners submitting timely payment and delinquencies raise costs on all other owners.  Accordingly, boards must always balance the interests of their association and the facts of specific cases when considering payment plans, and they must also ensure settlement payment plans are not so liberal or freely entered into that they no longer serve those interests. When dealing with collections, one size never fits all, and what fits one day, may later need adjustment. As such, it is important for Board to constantly review their collection practices and to realize that at times it may need to be more aggressive and other times less so. 

            At Williams and Strohm, we have a team of attorneys that are experienced in collection actions and that handle these matters every day. We understand the realities of litigation and work closely with our clients to ensure they are getting the best results possible from their collection pursuits.  As part of this, we are happy to consult with our clients to adopt collection strategies that work for their specific community and that adjust to the changing needs of communities over time. Further, we have the experience and knowledge to help communities undertake and employ these strategies in a manner that gets results.

            If you have questions about collections, payment plans, or any other matter related to community associations, please reach out to one of the attorneys at Williams & Strohm, LLC at (614) 228-0207.