PA Legislation will make collections of assessments and fees from delinquent association members less costly for the SLCA. We will be discussing collections plans at the annual meeting, Saturday June 4, 2016 at Borough Park.
The SLCA is watching legislation this session that may make it less expensive for the Association to collect maintenance fees from property owners who are in arrears. This is a matter of fairness to the property owners who are contributing to the upkeep of the lake, its dams and spillway.
Today HB 1340 passed the house 48-0 and moves to the Senate. Of particular interest are amendments to the Pennsylvania Uniform Planned Community Act (UPCA) to include
“…homeowner associations rely on unit owner assessments to pay for various obligations imposed on them by their governing documents and the Acts. In most cases, these obligations entail not only maintenance and repair of unit components such as roofs and siding, but also infrastructure components, including roads, storm water management and utility systems. Continued payment of assessments as well as the ability to collect them, is therefore, vital to these communities.
To assure continuous funding, the above-noted sections of the Acts impose upon each unit a “lien for assessments”. This statutory lien serves as an effective mechanism to promote the payment of assessments and as appropriate security in the event of a serious delinquency. However, most often, associations seek to recover unpaid assessments by obtaining a personal judgment against the delinquent unit owner(s) rather than foreclosing on the statutory lien as a bank or other financial institution would foreclose on a mortgage. Such a collection procedure is much less expensive than a foreclosure action and enables the homeowner to retain ownership of his or her home.
Last year, the United States Court of Appeals held that a personal judgment obtained by a community association does not preserve the statutory lien. This means that unless associations file lien foreclosure actions within three years of a delinquency, the lien for assessments is extinguished. As a result, associations will be required to resort to much more drastic, aggressive, and expensive foreclosure proceedings to assure continued financial viability. In turn, collections of unpaid assessments will become substantially more expensive and time-consuming, with the increased costs being passed on to homeowners.
The proposed amendments to Section 3315(d) of the UCA and Section 5315(e) of the UPCA will solve the serious problem caused by the decision and enable associations and their members to resolve assessment delinquencies without putting ownership of homes at risk through foreclosure proceedings intended to protect the association’s lien position. Such amendments comport with decades of practice in the community association arena and are consistent with the best interests of our community associations and their members.”