5 Tips For Better Associations Collections

Association boards and owners alike become frustrated when others don’t pay their fair share. How do we properly combat owners who don’t pay? The best practices for the payment of condo and HOA fees often start with administration. Here are a few best practices that our HOA team recommends:

1. Ensure that your manager or Board, if self-managed, sends the attorney a monthly delinquency report. We don’t charge for the review and a monthly report ensures we can make good recommendations before the balance gets out of hand.

2. Implement a meaningful late fee policy. Having no late fees or a small late fee often won’t encourage owners to pay on time. For annual associations, consider implementing an annual late fee that will be high enough to encourage on-time payments, or a lower monthly late fee (some courts may not enforce monthly late fees, but most will). For monthly associations, implement a monthly late fee.

3. Ensure your late fees and collection procedures are part of a written policy. If ever questioned in court, we need to show that the particular policy, including notice of the late fee policy, was provided to the owners. We can assist the Board or manager in preparing this sort of policy.

4. Send monthly notices of late payment. Management must send notice to the owner each time a late fee is assessed. If your Association is self-managed, the same recommendation applies.

5. Don’t wait several years to begin collection action! We speak with some Boards that choose not to take legal action until a few years’ worth of assessments are past due. If there are sales, bankruptcies, or foreclosures, the Association can lose this money if not liened.

Written By: Lindsey Wrubel Associate Attorney