Why Your HOA Needs a Written Collections Policy
Some Homeowners Associations are lucky enough to have minimal collections concerns. However some, are constantly dealing the delinquency of homeowners falling behind on dues. No matter where your HOA sits on this spectrum, it is vital for your community to have a written collection policy documented for the HOA, and a managing partner to handle the day-to-day tasks.
Why Your HOA Needs a Written Collections Policy in Place
A written HOA collections policy partially removes the HOA board from having to manage the day-to-day aspects of collecting dues (by delegating to their managing partner) allowing the board to act impartially with their homeowners. Board members can not give leniency to friends in the neighborhood, or vice versa, act harshly with community members they may dislike. Think about this, if you know some of your neighbors personally or see them on a regular basis, do you really want to be the one in charge of collecting past due balances from them?
A written collections policy, in addition to a managing partner, makes the process easier for the HOA board and ensures all homeowners are treated fairly.
Additionally, without a written collection policy, the board may not recall the precedents set with each new collections scenario, forcing them to dig up records of how they’ve handled other past-due assessments, in order to make a decision on present collection situations. And what if they can’t find record? Now we have a situation with no precedent being followed at all.
How to Create an HOA Collections Policy
First, we suggest you review our 5 Ways to Ruin Your Collections Process blog, which gives our top five big “no-no’s” for HOA collections policies and procedures.
Next, contact your Planned Development Services Community Manager and an Arizona Collections Attorney, to make sure you follow the correct process according to Arizona law for collections.
Many times, it is impossible for a policy to cover every circumstance, but your new HOA collections policy should be able to address frequently-encountered scenarios. Your Community Manager (and attorney) will create a list of questions for you to review. Once your board has decided and agreed on the responses, a formal collections policy can be drafted and approved at your next HOA board meeting.
Once the HOA collection policy is in place, the board’s involvement in regular collections actions is minimized, leaving more time to accomplish other community goals and projects.
While a collections policy can’t keep your homeowners from falling behind on payments, having a firmly documented plan for how past-due assessments will be addressed, will allow the HOA to collect those fees sooner and with higher success. Regardless of a homeowner’s individual financial circumstances, it isn’t fair to the rest of the community that pays on time, to end up paying more to cover expenses and attorney fees incurred because of a delinquent payer.