Though both the economy and housing market are finally on the upswing again, community associations are still facing high numbers of unpaid assessments and foreclosures. With community budgets dependent on 100% participation from homeowners, this puts HOAs across the country in a tight spot when it comes to finances and means the Board of Directors must stay vigilant – and consistent – with collections.
A consistent, strong but fair collections policy is one of the most important aspects of community management. If assessments are not paid, neither are power and landscaping bills. By instituting a clear policy and steadily enforcing it, homeowners will understand the consequences of unpaid assessments. It is part of the Board’s fiduciary duty to the association to ensure the community runs smoothly.
The collections policy should include provisions for both collecting assessments on time as well as collecting delinquent assessments. Begin with the community governing documents to check if they contain their own provisions or merely grant the Board power to institute their own. From there, set due dates, grace periods and late penalties, and how late penalties are applied. The collections policy typically includes levels and events put into effect by time or outstanding balance, ending in a lien or in extreme cases, foreclosure. Be sure to include include homeowner notification and legal procedures, and who pays for the collections costs. Confer with your association’s lawyer to ensure the policies fall in line with any state or federal laws.
Once the policies are decided upon, notify homeowners of the changes and do not deviate from them. Acting firmly and quickly will discourage homeowners from skipping or delaying payments. If they think they won’t receive a penalty, homeowners often hold off on sending in payments, and more homeowners who are merely late can be effectively worse than several who are thousands of dollars behind. No one likes collections, but for a homeowners association to be able to function at the required level, it is necessary.
Cedar Management Group takes the association’s collection policy and works with the Board of Directors to ensure it is fairly and aggressively enforced from start to finish. Homeowners are given multiple payment options to submit payments on time, and we provide the Board with collection status and delinquency reports every month. For more information on how Cedar Management Group can assist your community with collections, please contact us at 877.252.3327 or via email@example.com.