When unexpected repairs mean a major out-of-pocket expense for the homeowner association, owners may be exasperated with the Board…and many owners will likely meet the news with resistance. Owners don’t understand the lack of forecasting the repair so it could be paid from the Reserve Fund. While long-range planning works well to help avoid special assessments, unexpected repairs are part of owning a home and running an association.
Exploring different payment options can help reduce conflict and keep your association running smoothly. Here are a few ideas to get you started.
Is Vendor Financing Available? Many companies that handle large maintenance and construction projects have financing options available. As you look at the terms, think about whether monthly payments would be easier for the owners. Make sure you evaluate the possibility of owners going into foreclosure because this could increase the association’s financial responsibility.
Does the Association Have the Flexibility to Offer Payment Options to Owners? It’s not easy for all owners to be able to pay the entire assessment, so consider a variety of payment options that can help owners meet their obligation. Potential choices could be 1-year, 2-year, and 3-year payment plan. Or, it could be 25 or 50 percent down with the balance due later. Another popular payment plan is 12 months at no interest. As the Board evaluates these options, make sure you consider the solvency of the association if some owners default. This can be a win-win if you don’t risk your association’s financial status and the HOA by-laws allow extended payment options.
Are Loans with Better Terms Available for The Owners? Discussing the potential of loans for multiple owners could result in better terms at a local bank or credit union. Knowing that the preliminary work has been done reduces some of the stress for owners, even when they know they must meet the credit requirements to qualify for the loan. It’s still up to the individual owner to pursue this option, but the HOA Board’s thoughtfulness goes a long way in reducing resistance to the special assessment.
Can the Association Qualify for a Loan? Many banks offer favorable loan terms to associations in good financial standing. Thus, an association loan can help owners meet the assessment through monthly payments. As you evaluate this option, consider the consistency of your monthly assessment collection to ensure that you don’t put the association at financial risk.
While we always support adequately funding the HOA reserve fund, unexpected issues can arise that create the need for a special assessment. When there’s a lot of money at stake, owners often meet the assessment announcement with resistance. The HOA Board can tone down this resistance by out-of-the-box thinking. Brainstorm different payment options that offer time and payment flexibility to help your HOA owners meet their financial obligation.