Whether you’re falling behind financially or upset about the condominium’s management, missing condo payments will cost you. That’s because Massachusetts condo associations have very strong collection powers under the law. So, whatever you do, don’t ignore collection notices.
If you don’t pay up, here’s what can happen:
1. Collection fees, interest, and attorney costs get added to the bill. In many cases I’ve seen, the collection costs very quickly and dramatically exceed the underlying overdue fees. That’s because condo associations, knowing that this cost gets added to your bill, have very little incentive to keep costs low. They don’t always shop for reasonably priced legal services, and why would they?
2. Your mortgage lender may pay it for you and tack it to the bill. Mortgage lenders, concerned that the condo debt might jeopardize its security interest in your unit, can – and often do – pay the bill for you. This gets added to your mortgage balance. So, what’s the problem with that? Well, if the bank pays it, you lose all ability to negotiate. Worse, the bank could use this as a reason to foreclose on your unit.
3. Rent gets intercepted. If you have a tenant, the condo association can get a court order to intercept your tenant’s rent payments.
4. Foreclosure. Just like a bank owed money, Massachusetts condo associations can foreclose on your unit – selling it at auction to recover money. This isn’t commonly done for small debts, but a hard-pressed, broke condo association may have no other choice.
What can you do to avoid this mess?
1. Deal with the problem quickly. If you miss a monthly condo fee, address the situation within 60 days. Expensive collection costs can start once the debt is 60 days old. If you’re falling behind, try to negotiate a repayment or catch-up plan with the association right away. Otherwise, that $300 debt can become $3,000 pretty quickly.
2. Pay first, then challenge. Problems with the condo association, its budget, or the fees are never a reason to withhold condo fees. Even if the association is in the wrong, you must pay first and challenge later. So, if you want to contest a fee or a fine, pay up first, and then challenge it. It may not seem fair, but it’s the best course of action for the longer run.