HOA Board Options When Collecting Unpaid HOA Fees
A challenge that many HOA communities in Florida encounter is how to deal with delinquent HOA fees. Unfortunately, when homeowners don’t pay their fees, the rest of the neighbors suffer by paying higher fees, receiving special assessments, and spending less on community events. Even if HOA board members deal with just a few homeowners who are delinquent on payments, the association’s budget can take a significant hit.
Suppose too many homeowners in the community stop paying their HOA fees (particularly in condominium associations). In that case, lenders may be unwilling to offer new mortgages or refinance existing loans for properties in the community. As you can imagine, this would harm property values.
So what are the options for HOA board members when collecting unpaid HOA fees? There’s only one answer: the HOA board must get tough.
The Value of Acting Quickly
The sooner you address delinquent HOA fees, the better off your community will be. Make homeowners aware of how soon the HOA will take action if payments are not collected to create a sense of urgency for submitting dues on time. For example, the board could communicate that the HOA will only wait 60 days for delinquent fees before placing a lien against the property title.
Additional Tips for Dealing with Overdue HOA Fees
HOA board members should implement the following policies for dealing with delinquent HOA fees:
1. Consult an attorney.
As a best practice, your HOA should select an attorney to advise your community on legally dealing with overdue HOA fees. If necessary, the attorney could prepare a letter to demand payment but remember that these documents can run between $200 and $500 per home. Suing a homeowner could cost upwards of $2,000. Your attorney should also be able to recommend a collection agency experienced in assisting with HOA collections to keep costs under control.
2. Prohibit the use of community amenities.
If a homeowner is delinquent on HOA dues, restrict him or her from using community amenities such as the pool or tennis courts until the fees are collected. Prohibiting community amenities is an effective motivator to get residents to pay dues.
3. Ask renters to pay fees if the property owner refuses.
As a best practice, have tenants sign a lease agreement that says they will pay HOA fees if the property owner doesn’t. This agreement will provide your HOA community with a backup source for payment.
4. Offer a payment plan for property owners in financial distress.
If a property owner is cooperative in wanting to make good on delinquent debt, offer to break down the HOA fees over 12 months.
It’s in the community’s best interest for HOA board members to take prompt action when dealing with unpaid HOA fees. Use the abovementioned tactics to collect overdue HOA fees and reach an agreement that will work well for the property owner and the HOA community.
Contact Us
Collecting unpaid HOA fees is one of the most significant burdens HOA board members face. Our team at Condominium Associates can alleviate your board of this crucial responsibility. Contact us to learn how we have been adding value to HOA communities in Florida for more than 30 years.