Community Association Collections: A Tough Battle

shutterstock_108953882Taking action against homeowners who are behind on their community association dues can be an unpleasant task, but it is also one that is absolutely necessary for an HOA to do. Delinquent payments can easily eat away at vital funds in a community’s budget. And, they can damage the community as a whole if not enough funds are being collected to keep up with expenses.

In tough economic times, it is understandable to have sympathy for neighbors in financial trouble, but that empathy can’t get in the way of standing firm on payments. Unpaid dues place an undue burden on those residents who are paying their agreed share, and HOAs need to have a plan in place to deal with unpaid dues.

Have a Plan of Action

Having a plan of action in place will make sure that the HOA is prepared to deal with delinquent homeowners and that it is living up to its responsibilities in serving the community.  When confronting residents who are behind on their community association dues, here are some of the actions that your board should be prepared to take:

  • Send Out Firmly Worded Courtesy Letters—the first step should be keeping the residents who are behind in their payments informed of the actions that you are preparing to take against them. Sometimes the threat of action can be enough to encourage them to get up to date on their payments.
  • Suspend Community Privileges—if a resident is behind on their payments, rules can be added to community charters that disallow them from using community spaces like parking lots, pools, and common rooms. If someone is not contributing to the upkeep of community assets, take away their ability to use them.
  • Report Debtors to Credit Bureaus and Collection Agencies—the possibility of damage to their credit rating can be a powerful incentive for residents to pay up. Be sure to familiarize yourself with what your state laws will allow, and pursue those options as firmly as possible while staying within legal guidelines.
  • Put a Lien on the House—while it can be an expensive option, placing liens on homes, and taking other legal action, should be on the table for when all other avenues have been exhausted.
  • Have Payment Plan Options in Place—-have a policy in place that allows delinquent residents to make payments on their debts. This gives debtor residents the chance to get back in good standing, and can save the HOA the expense of pursuing legal action. Payment plan options must be applied uniformly to all residents

A Firm but Fair Policy

Consult with the HOA attorney and other experts to make sure that the collections policy stays within the law, and then be sure to apply it equally to all residents. While a collection plan for community association dues is a punitive policy, it should not be seen as being used to unfairly punish only certain residents. It is, above all, a measure to encourage residents to contribute their share to the community in a timely manner.

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