Tips for collecting delinquent HOA fees
Non-payment of HOA fees can be quite the nightmare. Failure to recover HOA fees is not only detrimental to the HOAs budget but it can scare creditors away. Some creditors won’t make mortgages if too many homeowners are behind on their HOA payment. It is in every homeowners’ interest that fees be paid on time, otherwise the HOA may be forced to impose special assessments, increase fees or fine homeowners who fail to pay.
Enforcing payment can be tedious, below are a few tips to keep fee recovery as non-adversarial and harmonious as possible.
If you’re collecting dues, you are probably part of the board. If so, consult your community associations’ attorney. Familiarize yourself with the bylaws and determine what avenues are available to obtain recovery from delinquent homeowners.
If a homeowner has leased the unit, review the lease agreement. Often times, the lease agreement allows the HOAs board to recover fees from the tenant if the homeowner fails to pay. This provides an alternate avenue for recovery.
So you’ve requested payment and still no luck, now it’s time to consider getting a little tougher. Suspend common-area privileges. You can limit access to the gym, the laundry room, or the pool. You’ll be surprised at how quickly payments appear when the use of amenities is banned.
Sometimes, you’ll need to get the courts involved. One way to do this is by placing a lien on the property. Yes, you can place a lien for failure to pay community association dues! Send a warning and demand letter, if the homeowner fails to pay, file a lien against the property. It may not guarantee payment upright but it will guarantee that the home cannot be sold unless past due payments are satisfied.
Finally, consider a reverse foreclosure. A reverse foreclosure forces the bank to foreclose on a unit when HOA fees and the mortgage are unpaid. Once the bank owns the unit, the bank is responsible for making paying the overdue HOA fees.
Remember, the goal is to maintain a harmonious community and avoid costly, adversarial proceedings. If you’re on the board of a small community and the homeowner is willing to cooperate consider creating a payment plan with a reasonable time limit, sometimes homeowners are facing a hardship and simple plan can assist in fee recovery.