Granting Payment Plans

Started by MichaelB1 • 2 replies • 1372 views

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MichaelB1 (Maryland)
Posts: 8

Posted:

My HOA has a very detailed collection policy but there is flexibility built in that allows the BOD to grant a waiver to any provision upon written request from an owner alleging a compelling personal hardship. I am part a of completely new board with no historical reference.

What is the basis a BOD should use when determining when a payment plan should be accepted or not?

Mike

JM2 (Oregon)
Posts: 439

Posted:

Hi Michael:

Any payment plan should have the following characteristics (not necessarily an exhaustive list):
1) It should be something that the owner can accomplish; if they can't pay within three months, give them more time than that.
2) It should not be too long. Granting them 24 months may not be a rational thing for the board to do.
3) It generally should include some interest. After all, the Board will be missing the money in the bank where (presumably) it would be earning interest.
4) It should reference that default under the payment plan makes the whole amount due and payable. If they are on a payment plan and just aren't going to make it, they may need to re-examine their financial situation and see if they need cheaper housing. I know that sounds harsh, but it becomes a burden on everybody else if they don't pay. At some point, people who can't pay need to face that fact and choose a course of action that's best for themselves and the HOA (= their neighbors).

If you have a management company, oftentimes they would be the ones negotiating with the owner on a repayment plan.

J. Patrick Moore, CMCA

MichaelB1 (Maryland)
Posts: 8

Posted:

Thanks J.,

You have outlined quite nicely what characteristics a payment plan should contain but how do we as a board decide which owners, that submit good plans, should be accepted. Do we automatically accept a payment plan from everyone who requests one as long as it meets the above outlined characteristics? We have a management company and usually the attorney negotiates a payment plan once it has been turned over to collections. We are trying to figure out how to, in a consistent manner, handle requests for payment plans that come in before it gets turned over to the attorney.

Mike

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