Most HOA members are diligent about paying their dues on time. Of course, there will also be occasions when one might miss a payment or fall behind. In those instances, it’s important to have a solid dues collection policy and process already in place. That way the association will be able to take pre-defined steps to address delinquencies in a fair, effective and non-combative manner. Let’s take a closer look at what a sound collections policy and procedure looks like below.
An HOA dues collection policy should, at the very least, do each of the following:
- Define what fees are, when they must be paid by and at what point they are considered late
- Specify late fees that can be assessed by the HOA and when those fees may be imposed
- Describe the steps taken by the HOA to collect delinquencies, including required notices and allowed timelines
- Identify 3rd party vendors to be used for collections activities (if applicable)
The ultimate purpose of a collections policy is to set expectations so that owners know what the consequences are should they become delinquent. It’s also useful for the HOA board in enforcing the rules fairly and consistently.
In addition to the policy itself, defining a clear and specific process for collections activities is also critical to success. While not every HOA dues collection process will be exactly the same, there are some key steps most should include, such as:
- Sending written notice of initial delinquency
- Followed by the follow-up ‘first warning’ letter
- Distributing a ‘second warning’ letter
- Enforcement action taken if still delinquent
One great way to improve compliance and cut down on late dues payments is to provide an online portal where owners can quickly and easily submit their payments electronically. Not only is this more convenient for HOA members, but it’s also better from a cash flow perspective.
Dues are essential to keeping a home owners association running smoothly. They cover everything from utilities, maintenance and repairs, insurance and anything else that might improve the community for its residents. By creating and implementing a solid policy and procedure, HOA managers can streamline collections process and maintain a more harmonious and well-run community.