Homeowners’ associations (HOAs) and condominium associations play a vital role in maintaining the harmony and integrity of planned communities. To ensure timely payment of assessments, these associations may need to resort to a collections process when homeowners become delinquent. It is vital for board members to understand and follow the legal procedures outlined in Arizona statutes when sending a final demand letter. This article will discuss the main issues surrounding the requirements for a final demand letter and the importance of documentation in this process. Here is what your HOA or condo association needs to know about final demand letter requirements in Arizona.
HOA Collections: Final Demand Letter Requirements Pursuant to A.R.S. 33-1807(K)
- No Collections Until HOA Sends Valid Notice
Before an HOA can initiate collections proceedings, they must first send a valid final demand letter to the delinquent homeowner. This letter serves as a formal notice, giving homeowners an opportunity to rectify the delinquency before the matter escalates. A.R.S. 33-1807(K) details the specific requirements that the HOA must adhere to when sending this letter to ensure it is legally valid. A final demand letter must meet the following requirements:
1) Statutory Disclaimer: The final demand letter must include the statutory disclaimer in ALL CAPS or in boldface type:
YOUR ACCOUNT IS DELINQUENT. IF YOU DO NOT BRING YOUR ACCOUNT CURRENT OR MAKE ARRANGEMENTS THAT ARE APPROVED BY THE ASSOCIATION TO BRING YOUR ACCOUNT CURRENT WITHIN THIRTY DAYS AFTER THE DATE OF THIS NOTICE, YOUR ACCOUNT WILL BE TURNED OVER FOR FURTHER COLLECTION PROCEEDINGS. SUCH COLLECTION PROCEEDINGS COULD INCLUDE BRINGING A FORECLOSURE ACTION AGAINST YOUR PROPERTY.
2) Certified Mail with Tracking: The letter must be sent by certified mail with tracking to provide proof the final demand letter was mailed.
3) Return Receipt Requested: The letter must also be sent return receipt requested to request the homeowner’s signature as proof of receipt. The statute does not require the homeowner’s signature, only that the final demand letter is sent return receipt requested.
4) HOA Contact Person: The letter must provide the name and contact information the homeowner can reach to resolve the assessment delinquency.
5) 30-day Waiting Period: After the letter is mailed, the HOA must wait for a minimum of 30 days to allow the homeowner an opportunity to make the necessary payment.
- Contents of the Demand Letter
The final demand letter should clearly state the amount of delinquent assessments owed, including any interest, late fees, and other charges applicable under the association’s governing documents and state law.
The Importance of Proper HOA Documentation
Documentation is the backbone of any legal process, including the collections procedure. Accurate and well-organized records can safeguard the HOA’s interests and provide evidence of compliance with the law. Important documents include:
- Copies of the final demand letter, properly formatted with the statutory disclaimer.
- Certified mail receipts and tracking information.
- Return receipt documentation, including the United States Postal Service’s green card or electronic mailing.
- Records of any payment receipts, communication, or agreements made with the homeowner during the process.
Condo Association Collections: Final Demand Letter Requirements under A.R.S. 33-1256(K)
Just like in planned communities, a condominium association must follow the same, specific requirements for sending a final demand letter. The association may not initiate collections until 30 days after they have provided written notice with the statutory language, as required in A.R.S. 33-1256(K).
- Form and Delivery
Similar to A.R.S. 33-1807(K), the final demand letter for condominium associations must be sent by certified mail, return receipt requested, to provide evidence of mailing. This ensures that the HOA provides notice of the association’s intent to pursue collections.
- Opportunity to Cure
The final demand letter must include the HOAs contact person to discuss payment of the delinquency within that 30 day period. The HOA may send the account to collections if the assessment debt is not resolved timely.
Navigating Collections with Confidence: How Our HOA Law Firm Supports Associations
Complying with the legal requirements for final demand letters is essential for both HOAs and condo associations when initiating collections proceedings. By following the specific statutes, including A.R.S. 33-1807(K) for HOAs and A.R.S. 33-1256(K) for condo associations, and maintaining comprehensive documentation, associations can protect their interests, minimize disputes, and pursue collections in a legally compliant manner. Seeking guidance from experienced HOA attorneys can provide valuable assistance in navigating complex situations and ensuring full compliance with the law. Contact the attorneys at Halk, Oetinger, and Brown for an initial consultation using the form on our contact us page today.
Halk, Oetinger, and Brown shares this article for informational purposes only, and it does not create an attorney-client relationship.
