As of November 30, 2021, your community associations demand letters may look slightly different. As of that date, new regulations went into effect regarding the Fair Debt Collection Practices Act (the “FDCPA”), 15 U.S.C. § 1692 et seq.
Since 1977, the FDCPA has regulated “debt collectors” who regularly attempt to collect debts owed by consumers to third parties. While association fees/assessments are considered “debts” under the FDCPA, associations and management are not considered debt collectors (at least in New Jersey). However, attorneys engaged to collect these debts are considered debt collectors and, as such, must comply with the FDCPA.
Put simply, the FDCPA requires various notices to debtors, prohibits certain forms of communications, and specifically bans harassment or abusive conduct by debt collectors toward consumers/owners. It also provides debtors with the right to seek verification of the debt from creditors. Community managers and board members are used to seeing specific language in initial demand letters or the disclaimer on other correspondence or e-mails in collection matters; those notices are required by the FDCPA.
So how will these new FDCPA regulations affect community associations going forward? Here are a few of the changes:
- You can expect to see a new form of initial debt validation notice, which looks less like a traditional collection letter and more like a demand for payment you would receive from a credit card company or medical provider;
- The new rules regulate how debt collectors may contact a consumer (association member) including limiting the number and types of contact and giving the consumer an option to opt out of certain communications; and
- The new rules specifically allow for certain electronic communications when consented to by the consumer
For more information on the new FDCPA regulations or any other issue concerning your community association, please contact one of our Community Associations attorneys.
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