Demand letters

What a demand letter is, and who is sending it

A demand letter tells an owner three things: what they owe, why they owe it, and what happens if they don't pay. The letter can come from the manager, from the board directly, or from the association's collection attorney. That distinction is not just tone, it decides which federal rules apply.

Under the Fair Debt Collection Practices Act, an association collecting its own delinquency in its own name is generally not treated as a "debt collector." The statute's definition covers someone who "collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another," and it exempts a creditor collecting under its own name.

"collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another"

Source: 15 U.S.C. § 1692a(6), Cornell Legal Information Institute

The federal floor: validation notices and the dispute window

Once a third party debt collector, an outside agency or an attorney, sends the letter, federal rules require specific content: who is collecting, an itemized breakdown of the amount, and a clear statement that the owner has 30 days to dispute it in writing. If the owner disputes in time, the collector has to stop collecting the disputed amount until it responds.

"the debt collector must pause collecting the amount of the debt you are disputing until they've adequately responded to your request"

Source: What information does a debt collector have to give me about the debt?, Consumer Financial Protection Bureau

Why hiring an attorney changes the rules

Handing a file to a collection attorney doesn't just add a signature line, it can move the whole letter under federal debt collection law. The U.S. Supreme Court, in Heintz v. Jenkins, held that a lawyer who regularly collects consumer debts through litigation is a "debt collector" under the FDCPA, even though the association itself generally is not. In practice, an association's attorney sending demand letters or threatening lien foreclosure is very likely bound by validation notice and conduct rules that the board's own letterhead is not.

State law can go further than federal law

Some states extend debt collection conduct rules to the association itself, not only to its outside collectors. California's Rosenthal Fair Debt Collection Practices Act has been described as covering original creditors pursuing their own debts, not just third party collectors, unlike the federal law. Check your own state's statute, and your governing documents, before assuming "we're the creditor, so none of this applies to us."