Steps to Take When Collecting Delinquent HOA Dues

As an HOA board member, one of your most important duties is enforcing the collection of dues from each member. Ensuring that your organization has the sufficient operating cash flow to perform maintenance and upgrades is the prime reason to enforce payment. However, dealing with delinquent payments is difficult at best, as some people who refuse to pay could be your friends and neighbors. What do you do? When you encounter late payments, try some of these strategies for dealing with HOA dues.

Institute a Collection Policy

Your HOA bylaws should clearly outline your collection process. Setting a standard policy can save time, effort, and money if members know the expected due dates. Having a set of guidelines will also help if problems arise.

A written policy informs new residents of the consequence of not paying dues and should detail escalating steps the association will take when payments are late. Include a procedure for disputing delinquencies. Have your HOA lawyer check your policy to ensure it is reasonable and legally sound. Include the following steps.

Title Search and Demand Notice

You should first conduct a title search in the real property records to ensure that you have the correct legal name of the owner(s) of the property. After a title search is conducted, you will then send a Demand Notice. This Notice should be sent via Certified Mail. This initial step is sometimes all that is needed, as sometimes homeowners simply forget that they have missed their payment. The notice should include all necessary information like the amount due, how many days late the payment is, and any interest or late fees.

Payment Plans

Compromise can go a long way when working with homeowners with delinquent dues, especially in times of economic hardship. If your HOA doesn’t have a policy for payment plans, consider setting up one.

You may need to consult your HOA lawyer about amending your CC&Rs to allow the implementation of a payment plan. After all, getting some of the money owed is better than getting nothing.

Make Dues Payments Easy for Members

Send reminders via newsletters, social media, text messages, and other methods. Various methods and multiple reminders will ensure that members see due dates. Regularly acknowledge and thank members who never miss a deadline, as this small step can go a long way.

Mail has been the traditional collection mode, along with HOA representatives going door to door on designated days to collect dues.

More recently, HOAs have turned to electronic collection as a way to collect dues. If you decide to invest in this method, include an option of automatic payments and payment plans to keep the money coming in. When setting up an electronic process, put safeguards in place to guard your HOA account against hacking.

HOA Fees and Foreclosure

Sometimes, nothing will work. Your HOA can place a lien on the delinquent property, which will eventually become an issue when the homeowner tries to sell or refinance. Depending on your governing documents, you may even be able to foreclose on the lien.

Another possibility is suing the delinquent homeowner through a lawsuit and settling the debt through wages or bank accounts.

Work with Top Attorneys That Deal with HOA Issues

Whenever you have problems with delinquent assessments or other HOA issues, contact the experts at Manning & Meyers.

Contact our attorneys to learn how we can help you with your HOA needs.

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