Association fees are collected from all homeowners living in a community association in order to cover the related expenses of the amenities, communal areas, and sometimes utilities like water, trash collection, and sewer service. Your Homeowners Association (HOA) should have a process in place for collecting those fees regularly, whether it’s through a monthly or annual invoice/statement/coupon.
If an owner isn’t paying the HOA fees that are due, it creates a problem for all parties. Your association will be short of the funds it needs, and your homeowner will be in violation of the governing documents that were agreed to when they purchased the property.
This happens far too often. A good HOA board will have a consistent and enforceable process in place to collect fees and dues.
First Step: Send a Notice
When you have a homeowners who are not paying dues, you need to notify them of that fact in writing. Send a reminder letter with the applicable wording from your governing documents and remind them that it’s their obligation to pay the dues on time, as members of the community. Provide some accounting that shows how much they owe and give them a deadline to catch up without facing further penalties.
It may help to give them several payment options. Provide access to an online payment system, offer to accept a check, or demonstrate a willingness to split a large bill into multiple payments. When you’re flexible, you’re more likely to get further in collecting overdue fees.
Second Step: Enforce the Consequences
Follow the process that’s documented in your governing documents. When association dues are not paid, you may be able to rescind the privileges that come with living in the community. For example, access to the community pool, clubhouse, fitness center, or other recreational amenities may be denied. You may also be able to refrain delinquent homeowners from voting in HOA elections or suspend other privileges and rights until the account is caught up.
Third Step: Collection Services:
CPM utilizes collection and dunning services where third-party company works to collect the past due assessments for a fee. If the delinquent party does not respond or agree to a payment plan their past due status is reported to Credit Bureaus. All collection costs are typically added to the delinquent owner’s account. This system has improved collections with those that are choosing whom they pay based on priority of consequences.
Worst Case Scenarios: Liens, Evictions, and Judgements
Each state has a different set of rules and laws when it comes to the authority of an HOA in collecting overdue fees and dues. However, there are cases where a homeowner can have a lien put against the property by the HOA. This is a drastic and extreme measure and we never want things to get this far. However, if homeowners are completely unresponsive to your requests for payment, it’s something you can do to get their attention and motivate them to comply. It’s also perfectly legal in some states for the HOA to evict a homeowner who isn’t paying the required dues. An HOA can even foreclose on a home when fees are perpetually unpaid.
Through an attorney the Association can file suit against delinquent owners. This can often take several months to get to court, but once there the Attorney will state the Association’s case against the owner and if the process and charges are reasonable the courts will often award the Association the amounts due and legal expenses. A Judgement becomes a public record and can restrain an owners ability to make certain purchases until the matter is resolved. The Association may also be able to garnish wages, bank accounts, repossess vehicles. If the unit is rented the Association may be able to collect the rent from the tenant and apply these funds to the past due assessments and expenses.
Make sure every homeowner in your community understands the requirement that they pay association dues. Make sure your process for paying them is clear and easy to follow. If you have a large number of residents in arrears, contact us at Community Property Management. We can help you strategize a solution.