Fair Debt Collection
Adams Stirling PLC


The Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from making false or misleading representations and from engaging in abusive and unfair practices in the collection of consumer debt. Violations of the Act can result in fines and damages against the association plus attorneys' fees.

FDCPA Applies to Assessments. Associations that hire third parties to collect delinquent assessments, such as lawyers, collection companies, and management companies, are governed by the FDCPA. In Thies v. Law Offices of William A. Wyman (SD Cal 1997) 969 F.Supp. 604, the court held that homeowner association assessments fall under the Fair Debt Collection Practices Act. The FDCPA requires that certain disclosures be made to homeowners. In addition, debt collectors are prohibited from making harassing telephone calls, making idle threats, directly contacting owners represented by counsel, etc.

Management Companies. A Minnesota case, Alexander v. Omega Management, Inc. (D.Minn 1999, 67 F.Supp.2d 1052) held that a property management company hired by the owners' association to manage community did not operate a business with principal purpose of collection of debts, and thus was not a "debt collector" within meaning of the FDCPA and performed a number of services unrelated to collecting debts, with less than three percent of its total operations devoted to the collection of assessments and past due accounts.

In Harris v. Liberty Community Management, Inc., Case No. 11-14362 (decided December 19, 2012), the United States Court of Appeals for the Eleventh Circuit held that a property management company acting pursuant to a management contract with a homeowners association was not a “debt collector” subject to the FDCPA when it attempted to collect assessments on behalf of a homeowners association.

Boards of Directors. Even though they have more flexibility, boards should avoid personally getting involved in collection activities.

RECOMMENDATION: It is not unusual for management companies to get involved in written communications regarding assessment collections including late letters, pre-lien letters and even assessment liens. Beyond that, boards should be cautious about using their management companies to collect debts. Neither boards nor management companies should not get involved in verbal attempts to collect delinquent assessments. The safer route is to use use reputable companies that specialize in homeowner association collections.

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.

Adams Stirling PLC