What You Should Know about Small Claims Disputes with Condominium or Homeowner’s Associations
Condominium boards and homeowners’ associations often end up in small claims court with members who haven’t paid their dues, fees, or assessments annual charges or special charges to pay for the upkeep of the common areas.
As a unit owner, you generally have no defense to the failure to pay these charges. They’re obligations you’re required to pay either by the state law or by the agreement you entered into with the other owners when you bought your unit. The amounts owed are clearly spelled out in the condominium or homeowner’s association bylaws and covenants.
A homeowner can’t successfully claim she didn’t know about the obligation even if she never physically received a copy of the offering plan, declaration, and bylaws. The obligations are recorded with the county clerk or other proper county official, which gives every owner notice of her obligation.
Yes, you read that correctly. If the condominium documents are recorded, you’re charged with knowing their contents. The recorded agreement is considered constructive notice, meaning it’s there for you to find if you look.
Actual notice is receiving the documents when you buy your unit. The fact that you’re using that stack of papers to hold up the broken leg on the couch and never bothered to read them isn’t a defense. After you receive a copy, the law says you have actual notice.
What this means is that if you have a legitimate dispute with the board of the condominium association or homeowners’ association over services not provided, problems over parking spaces, or use of common areas, you still have to pay the dues and assessments. You may have a right to bring your own lawsuit, but the existence of the dispute does not relieve you of the obligation to pay the charges.
This makes perfect sense because if every homeowner upset about something could stop paying dues, pretty soon no one would be paying, and the organization wouldn’t have the money to properly run and maintain the association.
Also, often there are assessments made beyond the monthly dues charges, which you’re also legally obligated to pay. For example, the board of directors votes to repave the parking lot, or redo the roofs on all the units, or improve the pool. Rather than increase the dues, they may levy an assessment against each unit.
The assessment may be due in one lump sum or payable monthly over a specified period of time. You’re responsible for these charges as well, even if you personally voted against them. So long as they are assessed by the management after following the rules for doing so, you’re responsible.
If you’re sued for non-payment of dues or fees by a homeowners’ association or other residents’ board, you have two defenses:
Show you made the payment: If you establish that you paid the obligation each month, that’s a defense to the lawsuit. The legal documents that created the condominium or homeowners’ association may permit late fees, interest, or collection costs to be added on to your obligation, so if you paid the monthly charge late a few times, you could still owe these penalties.
Claim that your unit is not a member of the condominium or the homeowners’ association: This defense is valid when the initial filings creating the condominium or homeowners’ association are incorrect and for some reason don’t include a few units in the filed documents. It may look as if your house belongs in the development, and people may think you belong, but you don’t.
Of course, if you’re not a member, you don’t have to pay dues, but you also don’t have any benefits such as use of the common areas, pool, and club house. So you may want to think twice about raising this defense.
Even though you may have a legal obligation to pay the dues and assessment, the board of directors still has to prove its case by:
Establishing that it has the authority to assess the dues.
Showing that resolutions were passed fixing the dues and assessments and sometimes authorizing the start of the lawsuit and that the action taken complied with the bylaws and rules. For instance, notice may have had to have been given to all homeowners in a certain manner. If the notice was not proper, that may negate the action of the board in passing the resolution.
Producing a ledger or account statement showing what amount was billed, that you were sent a bill, and what amount you paid, if any.
Proving that it has authority to assess any late charges, interest charges, or legal fees it’s trying to collect and that the amounts assessed are correct.
A common error in billing for late charges is that the board charges an amount different from that set forth in the bylaws and has no explanation for it or documentation to show that the bylaws were properly amended to permit the charge.
If you have a claim against the condominium or the homeowners’ association, you may have to establish that you complied with the requirements in the bylaws for bringing your problem to the board of directors and any procedures set forth for resolving disputes before going to court.
Also you may not be able to go to court initially. You may be required to file a complaint with the state agency that governs condominium activities before you can sue.
Although most homeowners’ associations sue to obtain money judgments against non-paying unit owners, most association agreements state that failure to pay the charges creates a lien on the property which can be enforced by seeking foreclosure and gaining ownership of the unit, similar to what happens if a mortgage is foreclosed. This type of action is generally not permitted in small claims court.