3 Keys For Collecting Past Due Assessments

Every community association at one time or another deals with collecting past due assessments. Whether the owner isn't paying assessments due to financial constraints, they're withholding payment because of a disagreement with the board, or they've abandoned responsibilities for the property, click through to find 3 keys to collecting unpaid assessments.....

1. Create a consistent collection policy - More important that being proactive, passive, etc. being consistent is a major part of managing unpaid assessments. I highly encourage all association boards to set policies regarding sending demand letter, notices, and filing liens.  The specific timeline for each decision is not as critical as simply having a guide. How many hours and meetings have been spent deciding whether to sent a demand letter to this owner delinquent, and when to file a lien on another owner?  By adopting a policy on collection procedure the board can quickly and easily discuss these sensitive matters. Additionally, not long as the policy is in place, owners generally figure out and support the collection policy. Ideally, for those associations with major collection issues, it might be the decision that helps change the culture around an association of owners failing to timely pay assessments. 
2. Monitor and understand mortgage foreclosures - Most times when an owner abandons their property and stops paying on their mortgage, for whatever reason, they generally stop paying assessments to the association as well. In these situations attempting to collect assessments directly from the owner is throwing good money after bad. However, ultimately when the bank completes its mortgage foreclosure the association will get paid something from somebody, depending on who buys the unit at the foreclosure sale. The vast majority of foreclosure sales are won by the foreclosing bank, so "safe harbor" provisions apply. After 12 months, the amount the association is going to receive is fixed and will not get any larger. However, speeding up that foreclosure process can increase the association's return by hundreds if not thousands of dollars.  The average foreclosure in Florida is taking over 800 days.  There are ways to get that cut down greatly if the association knows what and when to ask for certain relief.  A specialized association attorney likely can help with this, but even knowing basic judicial procedure will help the association know which matters to refer to the attorney and which might be near resolution without association involvement. 
3. Make it easy to pay assessments in the first place - Obviously, the best way to address collection issues is to avoid them all together. The easy things to facilitate owners paying assessments are verifying that invoices or coupon books are being promptly and routinely provided to owners. Also, many association are starting to move towards automatic withdrawal payments. Lastly, each year the association should audit their contact information for owners, especially for those that are delinquent. In the Florida panhandle many units are investments properties. The owners move and forget to notify the association or its management. In these case, one quick place to check the address is the county's property appraiser website. All Florida property can be searched via owner name on their respective county's appraisers website. The appraiser's site will have the property address and mailing address (the county want to get paid too :)).     

I'm going to discuss in future posts specific collection strategies, but most association will see dramatic and rapid improvement in collection by simply adopting these three keys to collective past due assessments.