Understand The Law That Protects Owners From Abusive HOA Debt Collection Practices

In our previous article “Homeowners Association Assessment Liability (HOA Fee),” we addressed the owner’s contractual obligation to pay maintenance assessments stemming from the purchasing of a property subject to recorded covenants. With that understanding, sometimes, owners face unforeseen financial hardships making it impossible for them to pay their association fees. This article offers basic information about the law that protects owners from abusive and unfair practices by collectors attempting to collect unpaid HOA fees, and best practice tips on how to deal with collectors.

Fair Debt Collection Practices Act (FDCPA)

 In 1977, Congress passed the federal Fair Debt Collection Practices Act (the “FDCPA” or “Act”) to prevent abusive, deceptive, and unfair collection practices by collectors. The act prohibits collectors from harassing consumers or using deceptive conduct when attempting to collect a delinquency. The maintenance assessments of community associations are subject to the FDCPA. Therefore, the association’s collectors must follow the law when attempting to collect past due fees from homeowners.

In addition to the FDCPA, many states have enacted similar laws imposing restraints and obligations to collectors. To access the unique state laws, or contact a local consumer protection division to seek help, please follow this link.

Understanding The Law

There has been much debate as to whether the HOA fees constitute a "debt" under the Act. However, many courts have determined that because homeowners have an obligation to pay money to the association and because the obligation arises from the purchasing of the property, HOA fees are a consumer debt within the definition of the FDCPA. To understand the logic, owners must read and understand the following key definitions outlined under 15 U.S. Code § 1692a - Definitions:


Consumer - any natural person obligated or allegedly obligated to pay any debt. 15 U.S. Code § 1692a(3).

Creditor - any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating the collection of such debt for another. 15 U.S. Code § 1692a(4).

Debt - any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment. 15 U.S. Code § 1692a(5).

Debt Collector - any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Notwithstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts...15 U.S. Code § 1692a(6) [Emphasis Added].


Consumer And Debt Applicability

First, we will review the applicability of the statutory definitions of “consumer” and “debt” for the purposes of the Act. The California Federal District Court conducted an analysis of applicability in Thies v. Law Offices of William A. Wyman, 969 F. Supp. 604 (S.D. Cal. 1997), a case involving a claim against an association’s law firm for violation of the FDCPA while attempting to collect past due assessments. On the issue of the consumer debt applicability, the court held that:


A consumer for the purposes of this statute is “any natural person obligated or allegedly obligated to pay any debt.” 15 U.S.C. § 1692a(3). Plaintiffs [homeowners] are consumers within the purview of the statute as they are natural people and are obligated to pay their homeowners association fees because of a covenant that runs with their property.


Taking this into account, the court subsequently explained the applicability of the statutory definition of “debt” by stating that “[b]ecause no offer or extension of credit is required… a transaction, for the purposes of the FDCPA, arises out of…[the homeowners’] obligation to pay dues for the services of the Association.” The court also concluded that the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes as required by the Act. The actual language of the court’s explanation of applicability reads:


Plaintiffs [Homowners], in purchasing their property, believed that the Association would maintain the common area adjoining their property and that they would not be responsible for its upkeep. Similarly, they knew that other common areas located within the development, such as parks, gardens, and swimming pools, would continue to be maintained. The upkeep of such common areas serves the purpose of preserving the aesthetic nature of the housing development for the use and enjoyment of each association member. Because anyone living within the development may use or enjoy these services, the Association’s maintenance and improvement of common areas can be utilized by a single person, members of a family, or members of a household. Thus, these services may have a personal, family, or household purpose depending upon the person or people that use it. In the instant case, the Court finds that the services funded by homeowner association fees serve all three purposes and that Plaintiffs do have a “debt” under the FDCPA.


Thus, the California Federal District Court established that homeowners are consumers that have an obligation to pay money to the association and because the obligation arises out of a “transaction” which is “primarily for personal, family, or household purposes,” HOA fees are a debt within the definition of the FDCPA.  Since then, many courts have considered the issue and followed the reasoning set forth in Thies, properly treating HOA fees as a consumer debt under the FDCPA.  For example:

See also:

Applicability of Debt Collector

In order for the FDCPA to apply, the collector must be an individual or entity whose “principal business” is the collection of debt on behalf of third parties. Many courts have interpreted this definition to include lawyers who regularly try to obtain payment of consumer debts through legal proceedings. For instance, the U.S. Supreme Court held that the FDCPA applied to the litigation collection activities in Heintz v. Jenkins, 514 U.S. 291, 294, 115 S. Ct. 1489, 131 L. Ed. 2d 395 (1995).

Likewise, in Fuller v. Becker and Poliakoff, 192 F. Supp. 2d 1361 (M.D. Fla. 2002), the court held that homeowners’ association attorneys who “regularly collect or attempt to collect debts are debt collectors for the purposes of the FDCPA.”  Therefore, attorneys who regularly engage in collections activities on behalf of homeowners associations are "debt collectors" subject to the requirements of the FDCPA. 

Exclusions of The Act

The Act provides the following exceptions to the definition of a debt collector carved out by 15 U.S.C. § 1692a(6)(A)-(F):


(A) any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor;

(B) any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts;

(C) any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties;

(D) any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt;

(E) any nonprofit organization which, at the request of consumers, performs bona fide consumer credit counseling and assists consumers in the liquidation of their debts by receiving payments from such consumers and distributing such amounts to creditors; and

(F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity (i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement; (ii) concerns a debt which was originated by such person; (iii) concerns a debt which was not in default at the time it was obtained by such person; or (iv) concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor.


For the most part, creditors (homeowners and condominium associations) are not subject to the FDCPA. The Act defines a creditor as "any person who offers or extends credit creating a debt or to whom a debt is owed." 15 U.S. Code § 1692a(4). Moreover, the association is not a debt collector for purposes of the FDCPA under 15 U.S.C. § 1692a(6)(F)(iii). See Alexander v. Omega Management, Inc., 67 F. Supp. 2d 1052 (D.Minn 1999; see also Newman v. Boehm, Pearlstein & Bright, Ltd., 119 F. 3d 477 (7th Cir.1997).  However, a creditor, "who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts" may be considered a "debt collector" under the FDCPA. 15 U.S.C. § 1692a(6).

Courts have also applied the exception in § 1692a(6)(F) to property managers who collect delinquent assessments and other fees. In Alexander, the court considered whether an association's management company who is hired to manage a community is a debt collector under the Act. The court held that the management company was not a “debt collector” under the FDCPA because (1) it’s “principal” purpose was not the collection of debts, and (2) the debt was not in default when the management company attempted to collect the fees. The court offered the following explanation:


In this case, it is undisputed that Defendant [property management company] was responsible for collecting assessments [for a homeowner's association] on a monthly basis...Defendant "obtained" the right to collect the [1998] assessments before they became overdue. Defendant is therefore not a "debt collector" under the § 1692a(6)(F)(iii) exception because Defendant is attempting to collect a debt "which was not in default at the time it was obtained." 15 U.S.C. § 1692a(6)(F)(iii)[.]


Other courts have adopted the same principle holding management companies exempt from liability under the FDCPA. Some examples include:

Summary of The FDCPA Applicability

Based on the above information, we find that:

  • HOA fees are subject to the FDCPA.

  • An extension of credit is not necessary to constitute a consumer debt under the FDCPA.

  • Homeowners Associations are not debt collectors under the Act, unless it uses any name other than its own when collecting a debt.

  • An association’s management company is not a debt collector under the Act’s express exclusions set forth in 15 U.S. Code § 1692a(6)(A-F).

  • HOA lawyers and persons whose “ principal purpose” is to collect debts, or “regularly” collects or attempt to collect debts are “debt collectors” under the Act.

Now that we understand the main elements required to pursue a claim under the FDCPA, we can review key rules that all debt collectors must follow when attempting to collect HOA maintenance fees. Please note that the following key prohibitions does not represent a comprehensive list under the Act that directly or indirectly affect consumers. Therefore, please visit the government's website for more information and an overview of each section of the FDCPA here.

The Collection Notices Must Meet The "Least Sophisticated Consumer" Standard 

A key factor all homeowners must consider is that any communication received from a collector must be tailored to the understanding of the “least- sophisticated- consumer.” This standard has been widely accepted as a test for determining whether collection notices violate Section 1692e of the Act. The purpose of the least-sophisticated-consumer standard is to ensure that the Act protects all consumers, including the less experienced individuals against liability for unreasonable misinterpretations of collection notices. Here are some cases owners should read to gain a better understanding of this standard:

Required Notices From Debt Collectors Under The Act

The FDCPA provides that a collector must provide the following oral or written communication to a consumer:

  • “This communication is from a debt collector in an attempt to collect a debt. Any information obtained will be used for that purpose.” And,

  • Each subsequent communication: “This communication is from a debt collector,” or “this is an attempt to collect a debt.” (15 U.S. Code § 1692(11)).

In addition, the collector must provide in writing the contents listed below within five (5) days after the initial communication (oral or written) with the consumer:

  • Amount of the debt (15 U.S. Code § 1692(a)(1))

  • Name of creditor to whom the debt is owed (15 U.S. Code § 1692g(a)(2))

  • A statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the collector(15 U.S. Code § 1692g(a)(3))

  • A statement that if the consumer notifies the collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the collector will obtain verification of the delinquency or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector(15 U.S. Code § 1692g(a)(4))

  • A statement that, upon the consumer’s written request within the thirty-day period, the collector will provide the consumer with the name and address of the original creditor, if different from the current creditor (15 U.S. Code § 1692g(a)(5))

Thus, all collectors must provide the consumer or homeowner they are attempting to collect from with (1) the amount of the delinquency, (2) name of the creditor that is owed, (3) the right to dispute the validity of the charges within 30 days, and (4) statement that if the delinquency is disputed, the collector will provide verification of the debt.

Prohibited Communications By Debt Collectors 

Under 15 U.S. Code § 1692b of the FDCPA, any collector communicating with any person other than the consumer for the purpose of acquiring location information about the consumer must —


(1) identify himself, state that he is confirming or correcting location information concerning the consumer, and, only if expressly requested, identify his employer

(2) not state that such consumer owes any debt;

(3) not communicate with any such person more than once unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information;

(4) not communicate by postcard;

(5) not use any language or symbol on any envelope or in the contents of any communication effected by the mails or telegram that indicates that the debt collector is in the debt collection business or that the communication relates to the collection of a debt; and

(6) after the debt collector knows the consumer is represented by an attorney with regard to the subject debt and has knowledge of, or can readily ascertain, such attorney’s name and address, not communicate with any person other than that attorney, unless the attorney fails to respond within a reasonable period of time to communication from the debt collector.


Prohibited Acts By Debt Collectors

Under the FDCPA, a collector cannot:

  • Discuss the delinquency with any another person other than the consumer (15 U.S. Code § 1692b(2))

  • Can only contact another person other than the consumer for purposes of obtaining contact information (15 U.S. Code § 1692b(3))

  • Cannot call before 8:00 A.M. or after 9:00 P.M. (15 U.S. Code § 1692c(a)(1))

  • Cannot contact consumer’s place of work if consumer notified collector not to call. (15 U.S. Code § 1692c(a)(3))

  • Cannot contact consumer if consumer is known to be represented by an attorney (15 U.S. Code § 1692c(a)(2))

  • Cannot contact consumer if consumer advises collector in writing to stop communications or notifies the collector in writing that consumer refuses to pay (15 U.S. Code § 1692c)

Owner can read all prohibitions under the Act by following this link.

Prohibited Abuse or Harassment Tactics

General key prohibitions against harassing and abusive conduct under 15 U.S. Code § 1692d):

  • Cannot threaten violence or criminal activity (§ 1692d(1))

  • Cannot use obscene or profane language (§ 1692d)2))

  • Cannot publish list of debts or debtors (§ 1692d(3))

  • Cannot cause phone to ring repeatedly for purpose of harassing or annoying (§ 1692d(5))

  • Cannot place telephone calls to consumer without meaningful disclosure of identity (15 U.S. Code § 1692d(6))

False Or Misleading Statements

General key prohibitions against making any false or misleading representations under 15 U.S. Code § 1692e:

  • Cannot falsely represent himself/herself as an attorney (15 U.S. Code § 1692e(2)(A))

  • Cannot state or imply that non-payment will result in arrest or criminal prosecution (15 U.S. Code § 1692e(3))

  • Cannot threaten suit, garnishment or seizure of property without legal ability to do so (15 U.S. Code § 1692e(4))

  • Cannot report or threaten to report false credit information (15 U.S. Code § 1692e(8))

Unfair or Unconscionable Acts

General key prohibitions against employing any unfair or unconscionable acts under 15 U.S. Code § 1692f:

  • Cannot attempt to collect any amount not authorized by law (Section 1692f(1).

  • Cannot accept or solicit a post dated check without providing written notice of at least 3 days of an intent to deposit (15 U.S. Code § 1692f(2))

  • Cannot accept or solicit a post-dated check for purposes of threatening criminal prosecution (15 U.S. Code § 1692f(3))

Enforcement of The FDCPA

Under the Act, a consumer may file a federal claim against the collector for actual damages in compensation for the harm suffered as a result of the violation, “additional damages” not to exceed $1,000, and reasonable costs and attorney’s fees. Specifically, 15 U.S. Code § 1692k(a)(1)-(3) of the Act provides:


(a) Amount of damages Except as otherwise provided by this section any debt collector who fails to comply with any provision of this subchapter with respect to any person is liable to such person in an amount equal to the sum of

1)    any actual damage sustained by such person as a result of such failure;

2)    (A) in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $1,000; or (B) in the case of a class action, (i) such amount for each named plaintiff as could be recovered under subparagraph (A), and (ii) such amount as the court may allow for all other class members, without regard to a minimum individual recovery, not to exceed the lesser of $500,000 or 1 per centum of the net worth of the debt collector; and

3)    in case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attorney’s fee as determined by the court. On a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney’s fees reasonable in relation to the work expended and costs.


6 Best Practice Tips When Dealing With Debt Collectors

  1. Seek to understand before being understood. For this, you will need to collect all information/documents in relation to the alleged delinquency from the collector. Examples of documents may include:

    • All past due notices from the HOA or the HOA’s management company;
    • A copy of your HOA’s account statement or ledger reflecting a zero starting balance. This is important because you will need to analyze your account to determine if all the charges on your account are lawful;
    • Copies of all the association’s governing documents, including the association’s Declaration, Collection Policy, Enforcement Policy, Fine Policy (if applicable), etc. This will allow you to determine if the HOA has the authority to collect the fees on the Collection Demand Letters.
  2. Review the records. Are there any violations of the FDCPA in the communication you received? Are the parties subject to the FDCPA?

  3. Preserve all records - keep a phone call log keeping track of all the calls the debtor makes including voicemails.

  4. If you dispute the debt, submit a written sworn denial.

  5. Communicate with the collector in writing. Keep in mind that all communication will be used against you, should the association move forward with collection efforts.

  6. Attempt to negotiate the debt by reducing soft costs, such as late fees, fines, interest and other miscellaneous charges. Keep in mind that you will have to pay the hard costs (e.g., maintenance assessments, legal fees, collection costs, etc.)

If you believe a single violation exists, talk to an experienced FDCPA attorney. This is a complicated subject and should be handled by an experienced professional who understands the law.  Our goal is to provide owners with general guidance and knowledge of their rights and obligations as HOA members. This article is provided for informational purposes only and is not a substitute for legal research and advice.


Watch the video recording for case: Zakia Mashiri v. Epsten Grinnell & Howell, No. 14-56927

The U.S. Court of Appeals for the Ninth Circuit held that HOA collection letters must meet the "Least Sophisticated Consumer" Standard.  Link to Opinion.