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Feldsott Lee Pagano & Canfield
Orange County Homeowners Association Law Firm

How HOA board members can collect delinquent dues

One of the main responsibilities of a solid HOA is to maintain the property values of the homes in the association. Collecting delinquent dues is one of the least pleasant jobs for HOA board members, but it is a necessary task in order to have funds available for maintaining the property. HOA dues are used to pay for operational expenses such as property upkeep and utilities in addition to building a reserve fund. When HOA members fail to pay their monthly dues, the association is at risk for financial hardship.


A due collection policy

Having a clear due collection policy in place allows HOA board members to proceed with collections in a uniform and systematic way. A strong collections policy will outline the due date for the dues, any late fees charged and penalties for nonpayment. The policy could also include information about the member’s right to appeal penalties.

One of the biggest advantages of having a collections policy in place is all members are held to the same standards and the collection process is clearly outlined in the boards governing documents. When new members move into the association, they should understand the dues payment expectations and how delinquent dues will be handled.

Collection methods

While the expectation is that all members will pay their dues on time, late payments will happen. Consider imposing late fees for additional motivation. Members can simply pay their dues and the late fees to become solvent.

If the late fees have failed to provide incentive for payment, move forward through your collection process. A good collection process offers the homeowner several chances to become solvent. In most cases a letter is sent out notifying the member of the overdue balances. If the member does not make an attempt to pay the dues, send a follow up letter warning the homeowner of the consequences of continued delinquency.

If warning letters have not been effective, the board can use stronger methods. The HOA can file a lien against the property. A lien ensures payment to the lien holder if the property is sold. However, depending on the value of the home and the probability of a home sale, a lien may not benefit the HOA. The HOA could also request a court order to garnish the homeowner’s wages or other assets. Court ordered debts are reflected on credit reports and homeowners may be spurred into action when their credit score is on the line.

Asking for funds is an unpleasant reality for board members, but the funds are necessary in order for the HOA to function. Before attempting drastic legal measures, try to work with delinquent HOA members to find a workable repayment plan. It can prevent the HOA from unnecessary legal expenses and retain a cordial relationship between board members and homeowners.

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