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  1. #1
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    Aug 2019
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    Default Can Collection Agencies Charge Excessive Fees

    My question involves collection proceedings in the State of: California

    I have paid for my home association fees for the past 20 years without a hitch through autopay. Because of a change of the management company, my autopay did not go through. As I don't read my snail-mail for notices that must have been sent to me, I did not realize this was happening until I received the first collection letter charging a $500 "collection fee" for the $800 owed. My efforts to have the management company withdraw my case from the collection agency was denied by the board and now I seem to have to pay the hefty and excessive collection fee to have this matter resolved (or otherwise I could hire a lawyer and sue in court which I'm not about to do). Note the fee was for having sent me a letter or two without even calling.

    My question is, is there a law against excess collection fees charged? If so then I'd plan to pay it all and then sue the collection agency in small claims court. But if there is no such law, then what is there to prevent the collection agency to charge whatever at their pleasure?

  2. #2
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    Oct 2014
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    Default Re: Can Collection Agencies Charge Excessive Fees

    Quote Quoting gent88
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    My question involves collection proceedings in the State of: California

    I have paid for my home association fees for the past 20 years without a hitch through autopay. Because of a change of the management company, my autopay did not go through. As I don't read my snail-mail for notices that must have been sent to me, I did not realize this was happening until I received the first collection letter charging a $500 "collection fee" for the $800 owed. My efforts to have the management company withdraw my case from the collection agency was denied by the board and now I seem to have to pay the hefty and excessive collection fee to have this matter resolved (or otherwise I could hire a lawyer and sue in court which I'm not about to do). Note the fee was for having sent me a letter or two without even calling.

    My question is, is there a law against excess collection fees charged? If so then I'd plan to pay it all and then sue the collection agency in small claims court. But if there is no such law, then what is there to prevent the collection agency to charge whatever at their pleasure?
    The collection agency cannot collect any fees from you that are not provided for in the contract that you have with the HOA. So the first step here is to read your HOA documents and see if the fee is provided for in there. Is it? If the answer is no, then that answers your question. If the answer is yes, tells us what it says about these fees.

  3. #3
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    Default Re: Can Collection Agencies Charge Excessive Fees

    Sorry I have misplaced the HOA documents after 20 years. 1) Assuming collection fee is not mentioned, and according to you, they have no right to charge the collection fee, does that mean that I'll be able to sue the collection agency in small claims court to recover it if I pay this now? 2) If the collection fee is mentioned, it would be safe to assume no specific amount is mentioned but just some wordings as " ... the homeowner will be responsible for costs associated with the collection of past dues". If this is the case, then would I also be able to sue for excessive collection fee after I have made the payment?

  4. #4
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    Default Re: Can Collection Agencies Charge Excessive Fees

    Quote Quoting gent88
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    Sorry I have misplaced the HOA documents after 20 years. 1) Assuming collection fee is not mentioned, and according to you, they have no right to charge the collection fee, does that mean that I'll be able to sue the collection agency in small claims court to recover it if I pay this now? 2) If the collection fee is mentioned, it would be safe to assume no specific amount is mentioned but just some wordings as " ... the homeowner will be responsible for costs associated with the collection of past dues". If this is the case, then would I also be able to sue for excessive collection fee after I have made the payment?
    I need to correct my earlier statement. In California, it appears that the statute governing HOAs gives the HOA the right to collect fees and assessments including collection costs, in California Civil Code section 5150 as follows:

    (a) A regular or special assessment and any late charges, reasonable fees and costs of collection, reasonable attorney’s fees, if any, and interest, if any, as determined in accordance with subdivision (b), shall be a debt of the owner of the separate interest at the time the assessment or other sums are levied.

    (b) Regular and special assessments levied pursuant to the governing documents are delinquent 15 days after they become due, unless the declaration provides a longer time period, in which case the longer time period shall apply. If an assessment is delinquent, the association may recover all of the following:

    (1) Reasonable costs incurred in collecting the delinquent assessment, including reasonable attorney’s fees.

    (2) A late charge not exceeding 10 percent of the delinquent assessment or ten dollars ($10), whichever is greater, unless the declaration specifies a late charge in a smaller amount, in which case any late charge imposed shall not exceed the amount specified in the declaration.

    (3) Interest on all sums imposed in accordance with this section, including the delinquent assessments, reasonable fees and costs of collection, and reasonable attorney’s fees, at an annual interest rate not to exceed 12 percent, commencing 30 days after the assessment becomes due, unless the declaration specifies the recovery of interest at a rate of a lesser amount, in which case the lesser rate of interest shall apply.
    (c) Associations are hereby exempted from interest-rate limitations imposed by Article XV of the California Constitution, subject to the limitations of this section.

    Not knowing what that $500 fee is for, though is still something that must be explored. They can't just impose any fee they want. It either has to be an actual collection fee or attorney fee the association paid or a late charge/interest with the limitations in amount as set forth in the statute. So what exactly was the $500 for? If it is a collection cost or attorney fee, the HOA should be able to itemize what it had to pay for that. And even if they can itemize costs, the next question is whether that cost was "reasonable." Not knowing what they say it was for, it's not possible to say if it might be reasonable.

  5. #5
    Join Date
    Mar 2013
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    Default Re: Can Collection Agencies Charge Excessive Fees

    Quote Quoting gent88
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    My question is, is there a law against excess collection fees charged? If so then I'd plan to pay it all and then sue the collection agency in small claims court. But if there is no such law, then what is there to prevent the collection agency to charge whatever at their pleasure?
    As a practical matter I think this is a no-win situation for you. If you pay the $800 and then sue about collection fee, the collection agency will incur attorney fees that you will pay if they can justify the collection fee and you lose.

    I suggest you pay more attention to your mail in the future.

  6. #6
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    Default Re: Can Collection Agencies Charge Excessive Fees

    Quote Quoting gent88
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    I don't read my snail-mail for notices that must have been sent to me
    Please explain exactly what this means.


    Quote Quoting gent88
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    My efforts to have the management company withdraw my case from the collection agency was denied by the board and now I seem to have to pay the hefty and excessive collection fee to have this matter resolved (or otherwise I could hire a lawyer and sue in court which I'm not about to do).
    First of all, the dollar amounts you're talking about are in small claims territory, so even if this went to court, no one would be hiring attorneys. Second, you have nothing to sue for.


    Quote Quoting gent88
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    is there a law against excess collection fees charged?
    "Excessive" is a completely subjective thing. That said, there is no law prohibiting what you're talking about. You need to review your CC&Rs to determine what sorts of fees you can be liable for.


    Quote Quoting gent88
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    If so then I'd plan to pay it all and then sue the collection agency in small claims court.
    Huh? What makes you think you can sue just because you dispute a charge? In any event, paying the disputed charge and then suing to get it back would be awfully foolish.


    Quote Quoting gent88
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    But if there is no such law, then what is there to prevent the collection agency to charge whatever at their pleasure?
    The ability to demand $X is not the same thing as the ability to recover $X in court.

    Quote Quoting adjusterjack
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    If you pay the $800 and then sue about collection fee, the collection agency will incur attorney fees that you will pay if they can justify the collection fee and you lose.
    Incorrect. The OP expressly said he/she might "sue the collection agency in small claims court."

  7. #7
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    Aug 2019
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    Default Re: Can Collection Agencies Charge Excessive Fees

    1. The new management company must have sent me written notices notifying me about the change in management and that my HOA fees were not being paid by the autopay arrangement I previously set up. But I did not read my snail-mails much and therefore was not aware of this until I received a letter from a collection agency.
    2. The collection agency is charging me $500 collection fee. So far they have only written a couple of letters to me and didn't even make a call to me. The $500 for two letters seem to be excessive but I probably would have to pay for it first, then be allowed to pay the past dues and future due to get this matter settled. I am just considering to take the collection agency to small claims court to get back part of the $500.
    3. You indicated that there is no law against excessive collection fees. Then the collection agency is being not very smart for not having charged something like $5,000 or more as they would be in a position to do so while I seem to not have any way to get out of this situation but to pay whatever collection fee they want to charge.
    4. The payment of past due HOA fees is not an issue I am only talking about collection fee of $500 which I consider to be excessive for their having written me a couple of letters.

  8. #8
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    Default Re: Can Collection Agencies Charge Excessive Fees

    Quote Quoting gent88
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    I did not read my snail-mails much
    You realize that important things often are sent by "snail-mails," right?

    As for the rest of it, as I previously wrote, anyone can demand anything one wants, but the ability to demand and the ability actually to recover are very different things.

  9. #9
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    Default Re: Can Collection Agencies Charge Excessive Fees

    Yes, you are right that there are important things sent through snail-mails. I have some sort of phobia and do not pay as much attention to them as I should. That's a personality fault that I realize that I have as a seventy-year-old man, but there isn't a law against that either. Thanks for your comments.

  10. #10
    Join Date
    Oct 2016
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    Default Re: Can Collection Agencies Charge Excessive Fees

    Quote Quoting gent88
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    That's a personality fault that I realize that I have as a seventy-year-old man, but there isn't a law against that either.
    But there are financial consequences as this case shows.

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