Michael Hunter

Can HOA report late dues to credit bureau?

Q: I am an HOA board member of a development containing 143 homes. More than a quarter of our owners are delinquent in paying their HOA assessments. Is it possible for the HOA to report these delinquent debts to a credit bureau?

A: While it might sound attractive for your HOA to report the delinquent debts to one or more of the consumer-credit reporting agencies (Equifax, Experian, and TransUnion) as a collection tool, your HOA would have to be a member of the bureau(s) to do so.

Only members can report information on consumer debts and obtain credit reports from these agencies. The membership, security, and legal requirements are extensive, and even if your HOA could clear those hurdles, you would likely find it to be cost-prohibitive. I’ve never known one of my HOA clients to apply for membership to one of the credit bureaus. Though I’ve never personally made an inquiry, my understanding is that the bureaus do not accept reports directly from homeowners’ associations, but they may accept reports from property management companies or collection agencies working on behalf of HOAs.

Credit bureaus often obtain and report information on a consumer’s debt from federal and state court records, which are open to the public. Thus, by filing a claim of lien on the owner’s property, filing a foreclosure, or obtaining a judgment against the owner in small claims court, there is a good chance that those records will eventually appear in the owner’s credit reports. However, there’s nothing you can do to ensure this will happen.

Charlotte attorney Michael Hunter represents community and condominium associations for the firm of Horack Talley. Email questions to home@charlotteobserver.com. Not every question receives a reply. Find his blog at www.CarolinaCommonElements.com.