All homeowner’s associations have to deal with owners who don’t pay dues. Even those with fairly low delinquencies will have a few owners that constantly fall behind. However, when owners stop paying the Association’s operational funds decrease while the operational expenses stay the same or increase. This puts HOAs in a serious bind. With the headache delinquencies cause, what can HOAs do to discourage owners from falling behind? Some HOAs have adopted the practice of publication. This is when the HOA posts a list of delinquent owners in a common area on the property for all to see. This practice, however, yields mixed results and can subject the HOA to lawsuits, especially if its information is inaccurate.
In Ohio, for example, one Association published a list of delinquent owners’ names but failed to do title research prior to the publication only to learn that one of the owners transferred her unit to a trust which meant that she was no longer the owner of record. Of course, she threatened to sue for defamation.
Some states have laws regarding how and when a Board can notify the community about delinquent owners. California, for example, requires that Boards identify the property by parcel number rather than by the owner’s name. But when state laws are silent, what is the best approach for an Association to take to discourage delinquencies and maintain compliance? What about the Board’s obligation to disclose the Association’s financial condition to owners who ask? Is there an inherent risk in doing this?
For Associations with owners who are chronically late, publication may have little effect on them. However, it may send a message to other owners not to fall behind at the risk that their business will be aired. I advise Associations who want to use publication as a deterrent to first check with local legal counsel to make sure that the jurisdiction in which you live has no restrictions on the practice. If there are none, I suggest that the Board establish a rule regarding publication so that owners will be on notice. The rule should include how owners will be identified and establish a minimum delinquency amount that will trigger the Association’s right of publication. There are risks with this practice so Board’s should take care to make informed decisions before putting owners on blast.
