By Calvin S. Rose, Esq. and Tracy R. Neal Esq.
Published in the CAI-Greater Inland Empire Chapter's
Connect 2016 2nd Quarter Magazine
The “no cost collection” model has come under attack in recent years, culminating most recently in the collection case, Hanson v. JQD, LLC d/b/a Pro Solutions, (N.D. Cal., 2014) (“Hanson v. Pro Solutions”). California community associations and the common interest development industry at large have watched this case unfold, beginning with a homeowner filing a lawsuit against a assessment collection services provider, and culminating in takeaways that will undoubtedly resonate throughout California.
Assessments have been termed the “lifeblood” of an association. Assessments are the sole source of income for associations, from which association expenses are paid, including daily operating expenses to common area maintenance and repairs. Boards have a fiduciary duty to levy and collect assessments. Like most businesses, community associations and the boards that run the day-to-day business of an association, seek out services at the best price, which in some cases may mean the lowest price. As a result, delinquent assessment collection services at no cost have appealed to community associations as they are non-profit corporations operating on a zero budget. Hanson v. Pro Solutions, however, has shown the potential real cost of “no cost collection”.
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