HOA Budget Crisis/Homeowners not paying fees

Hi Everyone,

We discovered that our HOA (which is currently run by a management company our builder hired) is having some serious budget shortfalls. The reason is the 50% of our homeowners are not paying their fees. We are a group of 360 single family homes in Georgia (Atlanta area). Our fees were raised last year from $330 per year to $400 per year.

How are other communities dealing with budget issues due to members not paying fees?

We recently gathered a group of volunteers to suggest solutions to the management company as to how the budget can be balanced to avoid bankrupting our HOA. We don't think raising the HOA fees would help since we don't have full compliance with homeowners paying now!

Here's what I would like to know:

* What methods have you used to successfully get homeowners to pay fees?
* What expense cutting have you done to successfully get your budget under control?
* What other sources of revenue have you found to help?

Any ideas you have would be greatly appreciated! The only thing we were able to come up with so far was either closing the pool or decreasing the period it is open. We also have a tennis court and clubhouse.

Kim

To ensure collections:

Our board approved a collections process that the property manager is required to follow. That process follows state collections laws to the letter. Nothing less and it cannot be, legally, more aggressive. Our collections attorney approaches the board when he needs an "intent to foreclose" vote and a subsequent vote to officially approve the foreclosure. It never gets this far 99.9%. We have one property that has been sold. The last dues paid on it were in 2008. The property currently has squatting renters and the owner has moved out-of-state.

Property managers who cannot collect are fundamentally negligent, if only due to professional passivity or incompetence. Replacing the manager should be paramount.

Do not cut your maintenance budget to save money in an attempt to avoid confronting delinquent dues-payers. Once the amenities start needing repair and replacement, you'll not be able to get ahead of the curve.

Everyone in your neighborhood chose to purchase a property that offers amenities only an HOA could support and daily operate. Property owners are NOT customers of the HOA. They are co-owners and have a responsibility. Some owners will be true hardship cases. Most will not be if your collection rate is 50%. It's unfair to those who pay diligently to cut amenities before attacking your community's collections problem.

It's that simple.

We are a large HOA in Florida, we have approximately 2000 units. For years we had people that were not paying. We were only collecting less than $50,000 annually. We had went down the road of a Community Association Management company (aka CAM). We consulted with a group called ... and their software allowed us to become self managed. We now collect in excess of $100,000 a year. The software is setup to automate the accounts receivable. The billing cycle is automated, then a second notice is sent 30 days later, then the "demand for assessment fees to be paid / Intent to lien" is sent. 45 Days after the intent to lien is sent, the system sends our attorney a PDF file with the lien completely filled out, all he has to do is sign and file. According to the software guys, the attorney's normally only charge $50 for the filing, because the form is filled out in the proper format with the most current information. So from initial billing to lien is approximately 105 days. This protects our dues and withstands Bank foreclosure, if filed before the bank has foreclosed. Then at day 150, we, the BODs, decide who we foreclose on. The system sends out the intent to foreclose notice. This notice has to lay over 45 days as well. So, on or about day 195, if the dues are not paid, or an amendable agreement is reached for us to recover our fees, we notify the Attorney, he logs on to the automated system, downloads all the documents kept on the server, and proceeds to foreclosure. Our legal expenses were dramatically reduced as a result of this.
As a result, our collections went from below 50% to about 96 percent.
One thing to keep in mind, if you are calculating the money, is our dues are below $60 a year. Also, when the Lien is filed, the owner is assessed a $150 assessment for "legal" fees. As of date,the software has paid for itself plus made the association money.
The bottom line is, as we had to learn, CAMs have no vested interest in your living area. Unlike you do. They siphon money that could go into the association to improve areas that are in need of improvement. Liens placed on properties quickly and without prejudice, not only protects the association, but it deters people that are holding out on paying, for what ever reason they have.
The other thing is, the software generates and assesses interest on late payers.
CAMs and Collection companies are making money at your expense, when you can take matters into your own hands. With the right software, you too could easily manage your own affairs in the Association.