The FDCPA and Debts That Can Cause Despair: Issues Implicated in Connection with Debt Collection for Communtiy Associations
The Fair Debt Collection Practices Act (15 U.S.C. § 1692) commonly known and referred as the FDCPA is a federal statute that regulates the conduct of debts collectors in connection with activity to collect consumer debt on behalf of creditors.
Although normally associated with and discussed in the context of credit card debt collection and other similar types of consumer debt, it is undisputable the FDCPA applies to action undertaken by attorneys to collect past due condominium and homeowner association maintenance fees and related charges.
As such, attorneys and law firms engaged to collect maintenance fees on behalf of association clients must be vigilant to comply with the requirements of the FDCPA and be aware of the damages that can be awarded for a violation. Penalties for violations include compensation for actual damages or $1,000.00 per violation as well as awards for attorneys’ fees to a successful plaintiff.
As such, FDCPA compliance will be taken into consideration at the time a law firm is engaged to collect past due maintenance fees by a community association. Typically, a retainer agreement will contain an indemnification provision advising that the association agrees to indemnify its counsel in the event the association or its management company provides counsel with a misstatement of the amount due that results in attorney liability under the FDCPA.