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My mom's HOA started charging late fees due to late receipt

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of the payment book. We...
My mom's HOA started charging late fees due to late receipt of the payment book. We were told to send a written explanation and the late fee would be waived; it was not waived and we received no notification. Thus, all months in 2015 were late due to the late receipt of the of the payment book for association fees. In Dec of 2015 they added a $500 fee due to chronic late payment.
There was no notification letters received, a lien was placed on the house and the house was listed for foreclosure auction due to $1550.50 in fees.
We paid the fees to keep our mom from losing her house. The association provided a paid in full receipt but continued applying late fees by changing the chronological order in the ledger for this house. The law firm stated that they sent notification letters and stated that they placed a second lien on the house and listed the payment to include paying to remove the lien. There has been no lien in May of 2016 listed in the county records.
The HOA law firm continued to charge large sums to get the HOA to agree to remove fees that did not occur; again we paid to keep the HOA from taking our mom's house. What laws protect our mom against this large HOA Management company and their lawyers?
Submitted: 1 year ago.Category: Real Estate Law
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Answered in 18 minutes by:
6/27/2016
Real Estate Lawyer: Maverick, Lawyer replied 1 year ago
Maverick
Maverick, Lawyer
Category: Real Estate Law
Satisfied Customers: 6,426
Experience: 20 years professional experience
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Need clarification on the following:

1. The association provided a paid in full receipt but continued applying late fees by changing the chronological order in the ledger for this house.

Can you explain this further? I don't understand how changing the order of the ledger allows them to assess late fees if everything was paid in full as of XYZ date; unless the late fees were for new past due amounts.

2. The law firm stated that they sent notification letters and stated that they placed a second lien on the house and listed the payment to include paying to remove the lien. There has been no lien in May of 2016 listed in the county records.

a. Are you saying that there is no recorded lien on the house as of May 2016?

b. Where did they list the payment and when?

3. The HOA law firm continued to charge large sums to get the HOA to agree to remove fees that did not occur;

a. Which firm charged who large sums?

b. Did you hire a law firm to help you on this but know cannot afford them?

4. again we paid to keep the HOA from taking our mom's house.

How much and was this for new late fees?

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Customer reply replied 1 year ago

Need clarification on the following:

1. The association provided a paid in full receipt but continued applying late fees by changing the chronological order in the ledger for this house.

Can you explain this further? I don't understand how changing the order of the ledger allows them to assess late fees if everything was paid in full as of XYZ date; unless the late fees were for new past due amounts.

The ledger should be in chronological order starting on 1/1/2016 through 12/31/2016. The Association received the $95 Jan-Feb 2 month Association fee check on 1/11/2016; they noted the check amount to reflect a Legal Prepare Foreclosure Notice Fee logged as $97.50 on 1/12/2016. Changing the chronological order allowed them to charge a late fee.

Date order FEE Balance

The ledger noted 1/1/2016 Assessment Fee $47.50 $1458.00

1/12/2016 Legal Prepare Foreclosure Notice Fee $97.50 $1555.50

1/11/2016 check 930 $97.50; this check was $95 $97.50 $1458.00

1/16/2016 late fee $25.00 $1483.00

1/19/2016 Payment check 1340 $1603.00 -$120.00

The Foreclosure Auction notice found on the door noted attempting to collect a debt… Assessment LIEN FORECLOSURE SALE with my brother’s address and the foreclosure notice was dated 1/12/2016 with the amount due: $1555.50. If on 1/12/2016 they applied the association fee the balance due should have been $1458.00.

1/19/2016 check was delivered with a written payment explanation noting: my mom’s current address at an assisted living apartment, $1555.50 of the payment was for Association fees and $47.50 was to cover the February association fee. They contacted us, no written notice to our mom, to note that an additional $208.87 was due to remove the house from the foreclosure auction.

1/29/2016 payment check 1341 $208.00 0 balance

Then we received this ledger after my mom received a letter dated March 29, 2016 from the law firm stating that she had 10 days to pay association fines in the amount of 652.50

I called my lawyer; we took the trash out at our mom’s house 1 time on 2/2/2016 and we locked the trash can in the garage; I am the only person with a key.

2/1/2016 assessment fee $47.50 $47.50

2/1/2016 fine trash cans $100.00 $147.50

2/1/2016 fine trash cans $100.00 $247.50

2/1/2016 fine trash cans $100.00 $347.50

2/1/2014 fine trash cans $100.00 $447.50

2/1/2016 late fee $25.00 $472.50

3/1/2016 assessment fee $47.50 $520.00

3/16/2016 late fee $25.00 $545.00

3/29/2016 Legal Demand $60.00 $605.00

4/1/2016 assessment fee $47.50 $652.50

The initial 1/11/2016 $95 Jan-Feb 2016 Association fee was noted out of order and the wrong amount to apply the fee to a different fee and the 1/29/2016 check requested that 47.50 go toward the monthly association fee; we were not aware that they applied the fees to other fees. It took a few reviews of the ledger to realize that they did acknowledge the January payment because they changed the amount in the ledger and they changed the chronological order of the ledger to apply that check for the foreclosure payment.

2. The law firm stated that they sent notification letters and stated that they placed a second lien on the house and listed the payment to include paying to remove the lien. There has been no lien in May of 2016 listed in the county records.

The ledger notes that on 11/19/2015 a legal 1st demand was mailed; to my brother.

12/7/2015 a legal 2nd demand and lien w recording fees is noted

5/23/2016 Demand and lien

5/23/2016 Legal recording fee

The ledger notes a FUTURE legal discharge of lien

The ledger notes a FUTURE legal recording fees; amount owed $1539.50

Our lawyer was in contact with the law firm serveral times by telephone and email. They agreed to remove the $400.00 trash can fines on 2/1/2016 and deducted $2.50 for the 1/11/2016 entry; they should have added $2.50. During the review they added another $500 fee for untimely dues and they added lawyer fees and stated they put another lien on the house but I do not see the lien registered with Wayne County. The 2015 lien, I could see that the lien was registered and my mom received the paperwork to validate removal of the lien.

They provided an email to our lawyer stating violation letters were sent to my brother’s address on:

7/29/2015

10/7/2015

10/14/2015

10/22/2015

10/30/2015

11/4/2015

11/11/2015

11/20/2015

a. Are you saying that there is no recorded lien on the house as of May 2016?

Yes, I looked again today.

b. Where did they list the payment and when?

5/23/2016 Demand and lien

5/23/2016 Legal recording fee

3. The HOA law firm continued to charge large sums to get the HOA to agree to remove fees that did not occur;

a. Which firm charged who large sums?

The ledger notes Millpointe Westland Association

Legal fees are applied as our lawyer notes the discrepancies in the ledger and they remove fees but added hundreds of dollars for legal fees

b. Did you hire a law firm to help you on this but know cannot afford them?

No, the association management firm is a large corporation: Kramer Triad Management Group. Our lawyer is not in a large corporate group. The association charges my mom legal fees for all legal issues related to her house.

4. again we paid to keep the HOA from taking our mom's house.

How much and was this for new late fees?

$1603.00

$208.87

$1539.50

The Association management group is not sending any notification that there are fees, late fees, unpaid fees, nor reasons for fees.

Since the notifications have been delivered to my mom at the Senior apartment the management group has sent 2 notifications for the board ballot/election and a reminder on outside maintenance. There are no invoices and no way to track what they are doing; we only have our bank accounts to validate that they cashed the checks.

I sent and overnight payment of 3 months association fees that was delivered to their PO Box at 8 am on 6/15/2016; the payment deadline.

They have not cashed the check but I do have the tracking to note the date and time of delivery.

Thank you for your assistance.

Real Estate Lawyer: Maverick, Lawyer replied 1 year ago

I am sorry, I want to help you; but I cannot make head or tails of what it is that is exactly going on here.

1. If you had to sum up what the HOA did wrong in five short sentences what would that be?

2. What outcome would you like to see happen here?

3. What is the specific legal question you want answered?

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Customer reply replied 1 year ago

1a The 1/15/2015 late fee was due to late receipt of the association fee booklet; the payment coupons are supposed to be submitted with the payment.

1b My brother called to let the association know that the payment book was received late; they told him to send a letter with the payment and they would waive the late fee. He was never informed that they did not waive the late fee so every month in 2015 the payment was made but a $25 late fee was removed 1st so every month in 2015 had a late fee; Dec had a $500 late fee for chronic late payments. He did not copy the letter.

1c 1/11/2016 $95 for Jan & Feb Association fees was paid they applied fees out of order: 1/12/2016 Legal-Prepare Foreclosure fee of $97.50 first and 1/11/2016 Jan & Feb Association fees as $97.50 and continued charging late fees in Jan and Feb.

1d On 1/11/2016 1555.50 was owed in fees they deducted the Jan-Feb association fees as 97.50 on 1/12/2016 as noted above: they did not deduct the 97.50 in the foreclosure notice noting unpaid fees of 1555.50 on 1/12/2016, If they did deduct the association fees the balance as noted in the ledger would have been 1458.00.

On 1/19/2016 I was told that the fees owed was 1555.50.

1e. 2/1/2016 is the only date we took out the trash in 2016 and they charge $400 in fines when the cans were put away before 11 am. Again a $500 chronic late fee was applied when we were in discussion for fees that should not have been applied.

2 I think this is fraud and this may very well happen to others but they cannot afford to pay all of the additional charges when they are trying to resolve the initial issue. I think there should be a true notification and tracking process for the homeowners. I think they owe my mom money; the lawyer for the association was very smug and felt nothing was done out of context. I need to be able to ensure that they do not continue to charge fees that should not be charged; the late fees when my brother followed their instruction, the $400 trash can fees on 2/1/2016 that cost my mom hundreds of dollars to the association lawyer for the association to agree to remove.

3. The legal question is what Consumer Protection Act or what law protects my mom from their creative accounting?

Real Estate Lawyer: Maverick, Lawyer replied 1 year ago

Thank you for the clarification. This is not a consumer protection issue. It is also not really a fraud case as per your state's laws. Under Michigan law, the elements of traditional common-law fraud are as follows:

As a general rule, actionable fraud consists of the following elements: (1) the defendant made a material representation; (2) the representation was false; (3) when the defendant made the representation, the defendant knew that it was false, or made it recklessly, without knowledge of its truth as a positive assertion; (4) the defendant made the representation with the intention that the plaintiff would act upon it; (5) the plaintiff acted in reliance upon it; and (6) the plaintiff suffered damage. [Diponio Construction Co, Inc v Rosati Masonry Co, Inc, 246 Mich App 43, 51; 631 NW2d 59 (2001), quoting M&D, Inc v McConkey, 231 Mich App 22, 27; 585 NW2d 33 (1998).] Fraud need not be proven by direct evidence. Detroit Trust Co v Hartwick, 278 Mich 139, 152; 270 NW 249 (1936). Rather, it has long been the law in Michigan that fraud may be proven from inferences based on the facts and circumstances. Id.; Connor v Harris, 258 Mich 670, 677; 242 NW 804 (1932).

As you have acknowledged, this is creative accounting. The proper way to handle this is to file a declaratory judgment action [DJA] against the HOA and ask for a court order that sets forth the proper manner in which the HOA is to apply payments when late penalties are involved.

more to come...

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Real Estate Lawyer: Maverick, Lawyer replied 1 year ago

MCR Rule 2.605 governs Declaratory Judgments and it states:

(A) Power to Enter Declaratory Judgment.

(1) In a case of actual controversy within its jurisdiction, a Michigan court of record may declare the rights and other legal relations of an interested party seeking a declaratory judgment, whether or not other relief is or could be sought or granted.

(2) For the purpose of this rule, an action is considered within the jurisdiction of a court if the court would have jurisdiction of an action on the same claim or claims in which the plaintiff sought relief other than a declaratory judgment.

(B) Procedure. The procedure for obtaining declaratory relief is in accordance with these rules, and the right to trial by jury may be demanded under the circumstances and in the manner provided in the constitution, statutes, and court rules of the State of Michigan. (

C) Other Adequate Remedy. The existence of another adequate remedy does not preclude a judgment for declaratory relief in an appropriate case.

(D) Hearing. The court may order a speedy hearing of an action for declaratory relief and may advance it on the calendar.

(E) Effect; Review. Declaratory judgments have the force and effect of, and are reviewable as, final judgments.

(F) Other Relief. Further necessary or proper relief based on a declaratory judgment may be granted, after reasonable notice and hearing, against a party whose rights have been determined by the declaratory judgment.

more to come...

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Real Estate Lawyer: Maverick, Lawyer replied 1 year ago

I spent about 20 minutes trying to find a Michigan case on any free legal databases to see if someone has appealed this issue to the court. I could not find a case that would shed light on this; but to be honest with you one should probably exist on the books. I suggest that if you do not have the money to hire a lawyer, you go to a Mich law library and ask the librarian for a book on MICH HOA laws. There you should be able to find a section on how payments should be applied when there are late fees. Some states are silent on the issue, some states require all payments to be applied to assessments first, and some states require payments to be applied to past outstanding late fees and balances.

If you find case law that speaks to this issue, it will make it easier for your to determine if you can win a DJA here.

Law firms use an expensive fee-based subscription service to find these cases.

HERE IS A SAMPLE DJA COMPLAINT TO USE AS A GO-BY

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Real Estate Lawyer: Maverick, Lawyer replied 1 year ago

Please assign a feedback rating so JA will compensate me for my time and we can close out this question. Thank you.

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