OR Fed. Ct. Says Efforts to Collect HOA Assessments Are Subject to Fed Debt Collection Practices Act

Oregon US District Court decision (May 21, 2015).

Commencing in 2009, a homeowners association (“Association”) sought to collect delinquent HOA assessments and associated fees and costs which approximated $1,000.00 from a homeowner. After a long history of repeated defaults, collection efforts, payment plans, and settlement negotiations that involved legal counsel for both the Association and the homeowner, the homeowner filed an action against the Association’s attorneys seeking damages in excess of $1,000,000.00 based on unfair debt-collection practices. In the action, the homeowner alleged that the attorneys had violated several provisions contained in the federal Fair Debt Collection Practices Act (“FDCPA”) and in Oregon’s Unfair Debt Collection Practices Act. The defendants contended that the FDCPA did not apply because the delinquent HOA assessments and associated fees and costs were not a “debt” within the meaning of the FDCPA because they did not arise out of a “transaction” and they were not “primarily for personal, family, or household purposes” as required by the FDCPA.

In analyzing the applicability of the FDCPA and prior court decisions, the court found that the nonpayment of HOA assessments, as well as the associated late fees, attorney fees, and collection costs constitutes a “debt” within the meaning of the FDCPA because the liability arises from the initial “transaction” of purchasing a home in the subject homeowners association. In addressing the issue as to whether or not the debt was “primarily for personal, family, or household purposes,” the court found that, even though the HOA assessments were not used specifically for maintenance of the homeowner’s property, they were used to maintain common areas and to administer the HOA and all homeowners in the Association had an ownership interest in the common areas as well as the right to use and benefit from those common areas. Based on those findings, the court concluded that the efforts to collect the HOA assessments and associated fees and costs were subject to the provisions of the FDCPA.

See case decision:Porras_v._Vial_Fotheringham_