5 Tips for Collecting Delinquent HOA Dues
In a perfect world, homeowners would live up to their obligations and pay HOA dues on time and in full every month. Unfortunately, this utopia does not exist and homeowners may find themselves in delinquency for any number of reasons, from job loss to poor personal finance management.
In most cases, resolving delinquencies is just a matter of negotiation, and with open dialogue the matter can be settled to everyone’s satisfaction without undue hassle. However, delinquencies can also be delicate situations that require some finesse on the part of the HOA board. Here are a few collection tips that could make the process easier.
1. Establish Policies
It’s a good bet that your HOA has already established some rules regarding delinquencies as part of the governing documents. That said, the board often has some leeway related to enacting policy.
It’s a good idea for the HOA board and managers to outline policies for notifying homeowners of delinquency, applying late fees to accounts, and taking action to collect. Consistent action in such cases can help you to avoid potential accusations of harassment by homeowners that feel they’re being persecuted, and it makes the difficult process of collections more cut and dry.
2. Correspond with Delinquent Homeowners
The most important part of any collections process is keeping an open line of communication with delinquent homeowners. As board members, you don’t necessarily want to place undue strain on your neighbors or the community.
With proper correspondence and communication, you have a much better chance of coming to an arrangement that works for delinquent homeowners while still allowing the HOA to continue meeting financial obligations to the community at large.
3. Meet to Discuss Payment Options
If correspondence produces no results, it’s probably best to meet with delinquent homeowners in person to discuss the situation. When the board understands why the homeowner is delinquent, both parties can begin negotiations to create a suitable plan for repayment that will bring the homeowner current and help him/her to avoid further fees and penalties.
4. Be Flexible, but Firm
The HOA board has financial obligations to live up to. While the best way to convince delinquent homeowners to begin paying is often to reduce late fees and create a payment plan that works for their particular situation, the HOA board cannot allow deviation once the plan is set.
You should do your best to accept a payment plan that the homeowner is capable of sticking to, but let delinquent homeowners know that any late fees removed will be tacked back onto the bill should they default on the payment plan.
5. Consider Legal Options
Although filing liens, lawsuits, or even foreclosure proceedings should be the last resort for an HOA board, these legal options do exist and should be used to collect if homeowners continue to miss payments.