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Community associations are entirely self-funded from the assessment payments of their members. When members (owners) do not pay, an association’s revenue is reduced, along with the association’s ability to satisfy its continuing obligations. Simply put, when owners become delinquent, such nonpayment directly affects the association’s ability to operate. As a natural result, the owners who are paying their assessments unwittingly subsidize the delinquent owners who are not paying. Worse, the delinquent owners continue to benefit from the association. Adding to the financial strain is that associations then redirect more of their ever-tightening budgets toward the costs of collection against the nonpaying owners. Recognizing these problems, the Georgia legislature has passed various laws that make it abundantly clear that community associations are entitled to recover their attorney’s fees and costs against the delinquent owners, the most recent of which became effective on July 1, 2008.

In Georgia, both common law and statutory authority support the proposition that community associations are entitled to the recovery of all reasonable attorney’s fees actually incurred. The Georgia Property Owners’ Association Act, O.C.G.A. Section 44-3-220, et. seq. (the “POA Act”) and the Georgia Condominium Act, O.C.G.A. Section 44-3-70, et. seq. (the “Condo Act”) are bodies of statutory authority that apply to condominiums and to certain other community associations in Georgia. These Acts each provide that non-paying owners are liable for all reasonable attorney’s fees actually incurred, as well as court costs. (See O.C.G.A. Section 44-3-232(b)(3) and O.C.G.A. Section 44-3-109). However, in order to benefit from the statutory protections afforded by these Acts, a community must be subject to them. The reality is that the majority of communities in Georgia are not subject to the POA Act or Condo Act.

Thankfully, the Georgia General Assembly passed a bill that put the collection of attorney’s fees for common law homeowners association assessments on the same statutory par as the Condo Act and POA Act. The bill was unanimously passed by both houses in the General Assembly in the early part of 2008, was signed into law by Governor Purdue, and became effective state-wide on July 1, 2008 as Georgia Code Section 44-5-60(e). The new law states: “To the extent provided in the covenants, the obligation for the payment of assessments and fees arising from covenants shall include the costs of collection, including reasonable attorney’s fees actually incurred.” With this new law in place, most common law homeowners associations in our State can feel confident that they are likely to recover all of their collection costs and attorney’s fees against the delinquent owners.

The public policy concerns behind these laws are clear. Owners are required to pay their assessments. Since community associations are nonprofit corporations comprised entirely of owners within the community, it makes sense that an owner’s obligation to pay assessments be absolute. With no legal justification for nonpayment of assessments, the collection costs incurred in proceedings against a delinquent owner should fall squarely back onto that delinquent owner. If these costs were not recoverable, owners who comply with the law and pay their assessments would not only be supplementing the delinquent owners’ shortfall, but would also be directly paying collection costs incurred to proceed against the delinquent owners. The financial burden of collections should instead be removed from the associations and placed where it should be – on the delinquent owners. This is precisely why Georgia law affords community associations with this protection.

Joseph C. Larkin, Esq.