Academic journal article Southern Law Journal

The Application of the Fair Debt Collection Practices Act to Condominium Assessments

Academic journal article Southern Law Journal

The Application of the Fair Debt Collection Practices Act to Condominium Assessments

Article excerpt

"Somehow I think that Adams, Jefferson and Madison must be turning over in their graves at the thought that the federal government is regulating such a local activity as the collecting of condominium association dues between the homeowner and the association."1


The above quote is from a case involving a condominium unit owner who owed past due condominium assessments to her condominium association. The unit owner alleged that the condominium association and attorneys hired to collect that obligation had done so in violation of the Fair Debt Collection Practices Act (FDCPA).2 The FDCPA was enacted in 1977 because Congress found that "[t]here [was] abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors."3 It wanted the FDCPA "to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses."4 Congress imposed civil liability upon those debt collectors who violated the FDCPA and provided a means by which individuals harmed by a debt collector could bring their legal action in the Federal district courts or in the State courts.5 However, the FDCPA did not apply to the collection of all debts; it only applied to those debts that met the definition of a debt under the Act. Debt is defined as "any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment."6

Whether condominium assessments7 are debts has been debated by the federal courts over the years. Originally, the courts were reluctant to find that these obligations were debts under the FDCPA. However, that began to change and there are now three U.S. Circuit Courts of Appeal that have issued opinions declaring that condominium assessments are debts under the FDCPA. The most recent case was in the Sixth Circuit, which that condominium assessments were debts even when the condominium unit owner was using that unit as rental income property.8 In making the determination that condominium assessments are debts, the courts have focused on the definition found in the Act, namely whether these assessments arose out of a transaction and whether that transaction was primarily for personal, family or household purposes.

There is a gap in the literature regarding the interpretation of the FDCPA and the definition of debt, especially when it comes to condominium assessments. Much of the literature only reflects that the courts have found that condominium assessments are debts under the FDCPA; however, there has been no further inquiry as to whether or not that finding is correct.9 There are approximately 150,000 condominium associations in the United States and that number is growing.10 Whether or not condominium unit owners are protected under the FDCPA for collection of delinquent condominium assessments is a question that will continue to arise and the bench, bar and academia could benefit from a detailed analysis and determination of whether the FDCPA should be applied condominium assessments.

This paper will first examine the FDCPA, its origin and purpose and how the federal courts have interpreted the "debt" definition generally. Next, this paper will discuss the form of real property ownership known as a condominium. We will examine how they are formed and how they are managed. Then we will look at how the courts have applied the FDCPA in condominium assessment cases. We will see that there has been a trend to expand the coverage of the FDCPA to cover these obligations. Finally, this paper will address whether this trend should continue. …

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