Association expert: Foreclosures, liens best left to legal profession

     By Barbara Holland, CPM
      Q. I am writing on behalf of a small association that is self-governed. We do our best to keep the association dues as low as possible, since so many of our residents are on a very limited budget. Therefore, it is imperative that each owner pays dues on time.
      We recently contacted a professional company that specializes in the filing of liens and foreclosure actions. With the assistance of this firm, we foreclosed and sold a unit and are in the process of foreclosing another.
      After going through all of the legal procedures to foreclose on the owner, can the former owner sue the board?
      The owner of the second unit has told us his attorney stated the foreclosure company is filing liens incorrectly. Isn't using a professional company the best way to collect dues from owners who repeatedly fail to pay on time?
      My last question concerns an owner who said we kept her prospective buyer from obtaining financing because we did not have articles of incorporation filed with the state. At that time, we had never heard of such a thing. Since then, we have obtained the forms but have no idea why or in fact if we need them. Do we?
      A. First, in our legal system, anyone can sue anyone. Whether the suit is improper or frivolous, a judge would have to decide based on the facts and the law.
      The company you selected to assist your association in the collection of dues has attorneys on staff who are knowledgeable of the law. It may ease your mind to contact them and discuss these two owners. They may be able to review with you the sequence, filing and publishing of all of the required notices that are allowed for a successful foreclosure.
      The company can review the lien process as well. State law provides the use of a lien and foreclosure to pursue delinquency. Filing a lien consists of sending a delinquent notice to the owner, followed by a letter of intent to file a lien, and then the filing of the lien. There are time requirements and methods of notice for each step, which allow the delinquent owner to take action. Liens must be carefully prepared with the correct names and addresses.
      After talking to your collection representative, she will probably recommend you proceed with foreclosure. If the owner's attorney believes it is improper, they can file their opposition.
      As for the last question, there is no requirement that an association has to be incorporated. Most are because corporate laws protect the board of directors and members of the association from being sued personally. An attorney can explain the benefits and requirements of incorporation.
      Questions for Barbara Holland may be sent to Association Q. & A., P.O. Box 7440, Las Vegas, NV 89125. Her fax number is 385-3759.
      Barbara Holland, Certified Property Manager, is president and co-owner of H&L Realty and Management Co. She is a member of the Institute of Real Estate Management and is the author of two books on the subject. Holland is a past president of the Greater Las Vegas Association of Realtors.