There are few things more basic to a homeowners association than the fees it takes to keep it running. Many HOAs are finalizing and announcing their budgets for the coming year, so this is an ideal time to review the result of owners not paying their homeowners association assessments.

When one or more owners default in the payment of assessments, the impact is felt by all. The longer the delinquency is outstanding, the deeper the cut.  While you may see it as a temporary financial situation on your part, the association counts on these funds to pay for maintenance and upgrades critical to the community’s common property. Just a few late or missing payments can impact the entire community.

If you’re on the Board, here are a number of ways to reduce the impact or avoid collection problems in your community:

Establish a collection policy with teeth. While this sounds simple enough, many HOAs have nothing more in place than a late fee. While you need to add penalties, it’s also important to add legal fees, collection cost responsibility, lien filing rights, etc.  It is critical to have a plan in place so that the association is clear what it will do before it knows to whom it will do it. 

Apply the policy consistently. Once the policy is adopted, enforce it to all homeowners consistently. While there are excuses to be heard, the board has a primary duty to protect the HOA’s rights. If one owner doesn’t pay, other owners end up covering expenses for them.

Apply the policy in its entirety. The typical collection policy consists of a series of sequential events that are triggered by time and/or dollar amount. Once put into motion, allow it to run its course. This typically includes in placing a lien on a member’s property.

Use an attorney experienced in legal collection procedures. While attorneys should not be the first line of defense, the regulation should include them when the balance due reaches a specific amount. Liens and foreclosures are an attorney’s domain. The impact of an attorney letter alone may be sufficient to turn the collection tide.

Let’s face it, collections are an unpleasant but necessary part of homeowners association living. Rather than reacting or overreacting as individuals, you may want to hire a professional community association manager to handle this for you.  A management firm doesn’t live there and for them, collections are business as usual.  It’s more efficient, less stress and can improve your neighborhood relationships.

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Wise Property Solutions serves condominium and homeowners associations by addressing their financial, association and facilities management needs.  The only certified and licensed community association management firm serving the Mountain South (Virginia, North & South Carolina, Tennessee) with offices in the Tri-Cities and Knoxville.

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