Be Careful With Collections

Published on: July 29, 2001

For many years now there has been an issue of whether either the state or federal fair debt collection practices act applies to the collection of common area fees. A series of recent federal trial court decisions interpreting the federal act have analogize condominium fees to real estate taxes and held that because there is no extension of credit the act did not apply. Most Massachusetts attorneys took heart in this reasoning since the Supreme Judicial Court and Appeals Court had equated condominium fees to real estate taxes in the Trustees of Prince Condominium v. Prosser and Blood v. Edgar’s cases, two of the key common area fee collection decisions. Unfortunately, the Seventh Circuit Court of Appeals overruled two of the mentioned federal trial court decisions and held that the term debt as defined under the Federal Fair Debt Collection Practices Act covers any obligation which arises out transaction which is for personal, family or household purposes. The Court reasoned that the acquisition of a house is such a transaction and thus the obligation to pay condominium fees, which arose from that transaction, fell within the statutory definition of debt. In reaching this decision the Court rejected the premise relied upon in the cases to the contrary that a debt required the extension of credit.

Since the New England states are in the First Circuit, this decision from Illinois is not binding our federal district courts and certainly is not binding on our state courts in their interpretation of the state’s debt collection act. Thus, some reliance can be placed on the federal trial court decisions to the contrary emanating from Florida and New Jersey. However, since the requirements of both the federal and state act are easily met, associations, their managing agents and their attorneys would be wise to adhere to their requirements.

The Massachusetts Act is quite simple and short (M.G.L. c. 183 §49). It applies by its terms to any creditor, or attorney for a creditor, of a person present or residing in Massachusetts who has incurred a debt primarily for personal, family or household purposes. It prohibits –

  1. communicating, threatening to communicate or imply the existence of the debt to a third party. Notifying a credit bureau, etc., is exempted. However, nothing on an envelope can indicate that it is about a debt.
  2. communicating with the debtor after notification by an attorney had he/she represented the debtor and that all further communication should be with them.
  3. communicating in a harassing or embarrassing manner, including doing so at an unreasonable hour, with unreasonable frequency, by threats of violence, by use of offensive language, or by threats to do something not done in the usual course.
  4. communicating by means of forms or documents which simulate judicial process.

The prohibitions of the Federal Act are similar. Thus, standard collection letters and/or statutory pre-suit notices addressed to the debtor should be acceptable. It should also be noted that unlike the state act which applies both to the creditor or its attorneys, the Federal Act applies solely to debt collectors (anyone doing more than incidental debt collection for others). Thus, the state act clearly applies to associations and their attorneys, but possibly not property managers. The Federal Act, however, would only apply to management companies and attorneys.

In addition to prohibiting similar matters to the State Act, the Federal Act requires that certain notices be given. First, it requires that the initial notice state:


Pursuant to the Federal Fair Debt Collection Practices Act (15 U.S.C. § 1692), a consumer debtor is required to be sent the following notice: (1) unlessthe consumer, within thirty days after receipt of this notice, disputes the validityof the debt or any portion thereof, the debt will be assumed to be valid by the debt collector; (2) if the consumer notifies the debt collector in writing within the thirty-day period that the debt or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and (3) upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor. The law firm of Marcus, Goodman, Emmer & Brooks, P.C. is acting as a debt collector, pursuant to the Federal Fair Debt Collection Practices Act. Any information obtained will be used for that purpose. The Federal Trade Commission has ruled that the Federal Fair Debt Collection Practices Act does not preclude the institution of legal action prior to the expiration of the thirty-day period.