In our earlier post, we learned how devastating it can to the COA or HOA when owners don’t pay their association fees. The other property owners have to make up the difference through higher fees, special assessments, or reduced spending on community amenities and upkeep.
Non-payment of HOA & COA fees is one the top problems facing condo, single-family, and other planned development associations. If not resolved, a large amount of debt can cripple or destroy an association.
In Part One, we talked about some of the strategies associations have available for them to collect unpaid fees; acting quickly, drawing a hard line, understand the options and suspending privileges. What are some additional ideas?
Make Renters Pay The Fees
If landlords don’t pay the association fees, it may be possible to require the renters to pay them. Some associations make tenants to sign a lease agreement promising to pay association dues if the landlord-owners don’t, giving the association a backup source for payment.
Considering offering a payment plan to owners with financial issues. Take the delinquent amount and divide it into monthly installments. If possible, make it a 6-month plan versus a 12-month plan. Document all the details, and be prepared to offer the plan to other delinquent owners.
Consider Filing A Lien
When a lien is executed in court, it tells the title company that the COA/HOA has to be paid when the home is sold or if the homeowner refinances his mortgage. Sometimes liens won’t generate payments until owners sell their home or refinance their mortgages, but demand and warning letters can work, even when the homeowner has no plans to sell or refinance.
Other Legal Options
There are several more legal angles, depending on what action needs to be taken. Attorneys can create letters demanding payment. Another option is to sue the owner individually and try to garnish wages to collect delinquent fees. Foreclosing on the property is another legal option but costs can easily exceed the value of the property. Beware though, as legal fees can easily exceed the amounts collected, costing the association money.
(This is Part Two of WHAT CAN ASSOCIATIONS DO TO COLLECT DELINQUENT COA & HOA FEES? To read Part One, click here)
LM Funding provides funding solutions to condo and homeowner associations (COAs & HOAs) to recover delinquent association dues and guaranty future association budgets using proprietary technology.