UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
Division of Credit Practices
Bureau of Consumer Protection
~
Thomas E. Kane
Attorney
|
|
November 6, 1995
Kenneth R. Goodacre, CPM
Senior Vice President
Legislative Affairs Division
Institute of Real Estate Management
700 Eleventh Street, N.W.
Washington, D.C. 20001-4507
Dear Mr. Goodacre:
This is in response to your letter requesting a staff opinion
regarding the applicability of the Fair Debt Collection Practices
Act (FDCPA) to property managers. I apologize for the delay in
responding. You seek guidance on three questions, which I will
address sequentially.
1. Are property managers subject to the requirements of the
FDCPA?
The FDCPA applies to debt collectors only. Thus the threshold
question is whether property managers fall within the definition
of "debt collectors" in the FDCPA. Section 803(6)(F)
excludes from the definition of "debt collector":
any person collecting or attempting to collect any debt
owed or due or asserted to be owed or due another to the extent
such activity . . . (iii) concerns a debt which was not in default
at the time it was obtained by such person.
If the property manager is an agent of the property owner, the
property manager probably is a "creditor" and not a
"debt collector" because the debt (the rental payments)
would not be owed to "another."
Moreover, even property managers who are not agents of the property
owner probably are not "debt collectors" for the following
reason. It is my understanding that rental payments being collected
by property managers are current when the property managers begin
sending bills to renters. Because the debts (the rental payments)
owed to another (the property owner) are not in default at the
time the property managers obtain them, the property managers
do not appear to be debt collectors for purposes of the FDCPA,
even when they collect rental payments that were current when
obtained but subsequently become delinquent.
2. Under what circumstances is a property manager considered
a debt collector?
Under Section 803(6) of the FDCPA, a property manager who is
an agent of a property owner ceases to be a "creditor"
and becomes a "debt collector" when, "in the process
of collecting [a rental payment], [the property manager] uses
any name other than his own which would indicate that a third
person is collecting or attempting to collect the debt."
A property manager who is not an agent of the property owner
becomes a "debt collector" if he regularly collects
rental payments that were delinquent when the property owner assigned
them to him.
3. Are attorneys attempting to collect delinquent rent payments
on behalf of a property manager considered "debt collectors"
under the FDCPA?
This office has previously stated in the Commission Staff Commentary
on the FDCPA (53 Fed. Reg. 50097, December 13, 1988) (copy enclosed)
that the definition of "debt collector" includes "a
firm that regularly collects overdue rent on behalf of real estate
owners . . . because it 'regularly collects . . . debts owed or
due another.'" Section 803(6), comment 1, 53 Fed. Reg. at
50102. Using the same reasoning, an attorney who regularly collects
overdue rent on behalf of a property manager would also be considered
a "debt collector" and would thus be governed by the
FDCPA.
The views expressed herein represent an informal staff opinion.
As such, they are not binding on the Commission. They do, however,
reflect the staff's current enforcement position.
Sincerely,
Thomas E. Kane
Enclosures
|