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Direct Debit for delinquent account payment plans

Started by JazzM • 12 replies • 1571 views

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JazzM (New Jersey)
Posts: 17
Posted:
Hello all,
Situation: Delinquent unit owners are willing to setup a direct debit to pay a certain amount every month per an agreed upon payment plan. For example a unit owner might agree to pay $500 every month towards the delinquent amount arrears (in addition to the monthly assessments of say $100), until the account is caught up.

Problem: Our property management company says that they can only deduct the actual monthly assessment fee by direct debit ($100/month). They claim they are not allowed to debit in excess of the monthly fee, even though the unit owner is willing to sign a direct debit authorization form for the additional amount.

Have any of you run into this situation? How do other management companies do this?

Thanks for any insight.
-jazz.
TimB4 (Tennessee)
Posts: 21,059
Posted:
Haven't ran into that situation.
However, most banks and credit unions offer free bill pay services that can be set up by the owner of the account for automatic payments.

Why not have direct debit for current and future assessments and have them set up a automatic bill pay for the payment plan.
JazzM (New Jersey)
Posts: 17
Posted:
Thanks for the quick reply Tim.

As these are delinquent unit owners who have not been paying for a while, we have had to execute various measures to get their attention (towing their cars, suspending privileges etc...). They have finally agreed to pay up now and agreed to direct debit. Our management company now informs us of this limitation (which they should have done earlier).

If we put the control back in the hands of the unit owner (to setup the auto pay, which they can cancel anytime), it would be back to square one for us. We want to make sure they are tied to sending in the additional payment every month.

I am just wondering if this limitation is something that applies to only our management company. Are there other associations who are doing this and if so how?
TimB4 (Tennessee)
Posts: 21,059
Posted:
They could also close the account at anytime.

Based on what you provided, it sounds like a reasonable compromise.
FredS7 (Arizona)
Posts: 927
Posted:
> They claim they are not allowed to debit in excess of the monthly fee,

Ask them to show you the law

I bet it's just a software problem.
JohnB26 (South Carolina)
Posts: 1,569
Posted:
DOH
SheliaH (Indiana)
Posts: 6,964
Posted:
We've run into a similar situation and are working on it - if we come up with a solution, I'll return with a response.

In our case, the delinquent homeowner was sent to the attorney - and then she proposed the payment plan. We wanted to collect the current fee plus the delinquency in one fell swoop, but to do that, she'll have to pay the attorney, who will then forward the money.
If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
MelissaP1 (Alabama)
Posts: 13,836
Posted:
I am suspicious on this arrangement. Something is not setting well with me on them wanting to set up this type of account. It sounds too good to be true. It does not make much sense. Why can they not pay out directly? Having an account with ability to close it without notification worries me.

If it were me, I would have lien in place. That is after not seeing a payment come from them in 30 days. This seems like a stalling method on their half. They can still write a check or insist on paying cash with a receipt. I would not even bother with the separate account or debit. It smells bad to me.
Former HOA President
JazzM (New Jersey)
Posts: 17
Posted:
Huh?
JazzM (New Jersey)
Posts: 17
Posted:
Quote:
Posted By JohnB26 on 04/02/2013 10:21 AM
DOH

Huh?
JazzM (New Jersey)
Posts: 17
Posted:
Quote:
Posted By MelissaP1 on 04/02/2013 12:01 PM
I am suspicious on this arrangement. Something is not setting well with me on them wanting to set up this type of account. It sounds too good to be true. It does not make much sense. Why can they not pay out directly? Having an account with ability to close it without notification worries me.

If it were me, I would have lien in place. That is after not seeing a payment come from them in 30 days. This seems like a stalling method on their half. They can still write a check or insist on paying cash with a receipt. I would not even bother with the separate account or debit. It smells bad to me.

We already have liens on most of these units. We have now got them to agree to pay up. They would be happy to pay in cash or check...but that creates the same problem as before...they pay this month and then forget about it next month. The direct debit would solve this problem (ofcourse they could close the account out...but its worth a shot).

The problem is now on our side, not the unit owners. Our property management company is unable to do the direct debit for the additional amount. Have any other HOAs in your experience done this?
MelissaP1 (Alabama)
Posts: 13,836
Posted:
We could do direct deposit if you had a bank account set up with the bank we used. So some members would have an account and put the whole years worth of dues into that account. That way they never worried about it being late. Other banks will allow you to do this but there is a charge for it. It isn't free from other banks.

The lien should not be released until the whole lien is paid off. So you would have to somehow credit their account and save that money to pay the lien off. I don't think the court system takes payments to pay off liens. Plus they still accumulate. So even if they save up for today's balance next month's balance and interest may be accruing.

You may want to look into getting another PM. They don't sound like they are capable of handling this issue which to me shouldn't be that much of an issue.
Former HOA President
JazzM (New Jersey)
Posts: 17
Posted:
Thanks for all your replies.

The PM just informed us that they can now take care of it and after "implementing some workarounds" in their system, they can take care of it.

Again appreciate all your responses.

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