What is fair when it comes to your collection policy?

Assessment fees support services that distinguish association-governed communities from conventional ones. When assessment fees arrive late or remain unpaid, it impacts the ability of a community to pay for crucial services such as HOA management, security, and grounds keeping, to name a few. Consequently, a community should have a late assessment fee collection policy that motivates residents to pay, while making it convenient for them to do so.

1. Late Notice

In many cases, late payments are not purposeful, and result from a resident’s temporary inability to pay assessment fees. Consequently, the collection process should begin with a courteous late notice that requests the resident to pay the balance within a certain period of time. Late notices are customarily sent out after a bill is fifteen days delinquent.

2. Repayment Schedule

If a resident’s fees are delinquent as a result of financial hardship, using a convenient repayment plan is the most practical way for the homeowner to come current on his fees. Because current fees will need to be paid as well, allowing a resident to pay ten percent of the past due amount each month is a sensible idea. The key is to ensure that the past due amount is easily repayable.

3. Daily Late Fees

While it should strive to accommodate residents, the association must motivate them to repay past due amounts as quickly as possible. Applying a daily late fee to the past due amount for a certain number of days is one way to do it. HOA management companies generally find that daily late fees motivate repayment more than applying a single fee when a payment is past due.

4. Letters of Demand

If sending a late notice, offering a convenient repayment plan, and applying daily late fees do not result in payments, the association may consider taking a more serious approach, and send the resident a professional-sounding letter that demands repayment within a short period of time. A letter of demand (prelien) is typically sent when a balance is 60 days past due.

5. Collection Agency

A prelien letter often states that the account will be referred to a collection agency if the past due amount is not satisfied within ten days. No community wants to refer accounts to a collection agency as it results in the agency charging a fee, and can make life hectic for the resident. However, it may be the only option on the table when the ones above are exhausted.

6. Contact an HOA Manager

If your community has difficulty collecting late assessment fees, an HOA management provider will help the board develop a sensible plan for pursuing past due amounts. Such a plan often includes the measures above, but the management provider will work with your association to develop a plan that meets the specific needs of your community and its residents.