Homeowner's Association and Their Debt Collector Lawyers Sued and Defeated For Wrongful Collections
Client received a notice of intent to record claim of lien and a demand letter from a law firm debt collector on behalf of a home owner's association entity, that ran the country club portion of the operation, for more than $10,000.00. The notice sought payment in attorney fees for around $2,500. The demand letter sent by the debt collector was on behalf of the HOA country club operation. The letter threatened debt collections, the filing of a lien, and a foreclosure on the home if the money wasn't paid in 30 days. Shortly after receiving the demand letter the debt collector lawyer filed a lien against our client's property. Here is where the case gets interesting; the first mistake we discovered in our research is that the HOA country club operation was using a name that was not registered with the State of Florida. They were representing themselves under an old name that was not registered and thus acting without any type of authority. Next, while the original demand letter called for payment of attorney fees around $2,500, the client received a follow up letter 60 days later where the attorney fees grew to over $5,000. Next, about 45 days after the 2nd demand letter, the client received a 3rd letter and attorney fees had now grown to over $7,000.
When we reviewed the HOA declarations we discovered a section on attorney fees which stated "…the HOA shall be entitled to recover all of its reasonable costs and attorneys' and paraprofessional fees at all levels, including appeals, collections and bankruptcy.” When we reviewed the breakdown of attorney fees in the 3rd demand letter we did not see any new or additional work that had been performed since the 1st letter, which was received only 90 days prior. Thus, the HOA country club operation was collecting fees and threatening foreclosure against homeowners as an unregistered entity with no authority to operate in Florida and it was clear to us that the debt collector law firm was simply doubling their attorney fees, without justification, for every letter they sent. Florida Consumer Lawyers filed a lawsuit against the HOA and the debt collecting lawyer in federal court and quickly reached a settlement in the case of more than $10,000 in damages. Our client went from owing $10,000 to getting paid $10,000 in less than 4 months after hiring our firm. A great result for homeowners in Florida.
Practice area(s): Bankruptcy / Debt
Court: Federal Court