Payment plans for delinquent assessments

We have a homeowner who, in the eight years I have been President, has had to be contacted twice a year when the assessments are due, to pay those assessments. All homeowners receive an invoice in December, a reminder of amount and due date with the annual meeting notice in January, and a third call for those who still have paid by the end of the grace period at the end of January. So, technically, we wind up contacting this homeowner six times a year to receive her annual assessments. In my first year, she was married and in the middle of a foreclosure. They owed the association $350. We worked with them, while they worked with the bank to keep their house, and we did get paid, and they kept their house. Shortly after, they got divorced, and ever since it has been this herculean effort to get her assessments. Each and every final time she is contacted her reason for not paying is she has been sick. But then she pays us in the eleventh hour of the grace period, without incurring a late fee. Because we ever only have one or two homeowners, at the most, who wait till the bitter end to pay, we would rather make a couple of calls over generating late fee notices. It has always worked. Until now.

Our enforcement procedures calls for step 1, after the grace period has been exceeded with still no payment, the homeowner receives a personal phone call from the President as a reminder and notice that she has 14 days to pay, before she receives her first written notice, which then also provides for another 14 days to pay, and then if still no payment, a third and final written notice is sent requiring a hearing before the Board, also within that 14-day time frame, to address the violation. If non-compliance remains unresolved after all the aforementioned has been followed, lien procedures are set in motion.

Yesterday, my neighbor came over and said Mrs.X, being childhood friends with his wife, texted his wife and told her of receiving the initial late fee notice, and the phone call, and asked whether we had any power make her pay? The answer was a swift, yes. Then she asked if my neighbor would talk to me, since she's sick with laryngitis, hence, the text. I learned my neighbors have helped her financially in the past. The gist of the conversation was if we would be amenable to some sort of payment plan for her. I told him that ever since the recession, HOA's have seen an steep increase of non-payment of assessments and foreclosures. And that the general advice has been to try to work out a payment plan, since receiving some money is better than receiving no money. I told him I would bring this to the Board and get back to Mrs. X.

I notified the Board last night, briefly, of the situation and suggested giving her four months to pay the assessments, till the end of July, which is the absolute final due date for everyone. Our assessments are $350/yr, in full or semi-annual at $175. I also suggested that this be a one-time contract. The VP suggested requiring her to set up automatic deposits from her account into ours every month, year after year. This is the extent of our shared thoughts on the matter until our meeting on Wednesday. Now, I am finally getting to my point! Sorry! I am a history major. Gotta have the history! I know for a fact that there are a few people who would love to pay monthly, one who lost his job three years ago, one a single mother, and one retired on a fixed income. To me the purpose of working with people for a payment plan is to give them some breathing room during a particularly difficult financial period. To me there is a difference between financial hardship and fiscal incompetence, the latter of which Mrs. X, given her historical pattern, seems to possess. To allow someone to pay monthly as long as they live here, when our Bylaws are clear about the payments in full or semi-annual, smacks of preferential treatment. Also, the deposits from her account to ours would have to be set up by her, which means they can also be cancelled by her. I am also not comfortable giving her our account number to give to her bank. So, before meeting with the Board, I thought I would turn once again to the good minds of HOATalk!

Advice? Thank you.

Dorothy

Jay, I like the phrase "secondary measures." This classifies this payment plan for what it is, as opposed to the perennial monthly payments, which would become "primary measures," and not what we should be advocating.

Tim,
I document the time and date of the call, whether I left a message or not, or the content of the conversation if we talk. We have already amended our process when we sent out a first written notice of violation and, to the person, we got hammered for not at least reaching out to the homeowner in person. So we chose to do that. If the process does get to the first written notice, we document the time and date and content of the phone call, within the notice. At any point the homeowner is instructed to contact the Board if he/she feels any of this process has been made in error. If it ever does get to the point of a hearing before the Board, (which it hasn't) all previous contact will be presented and documented as well. If it ever gets to court we are confident we have the paper trail to support our actions.

Dorothy

Assessment payment procedures are clearly written in our Bylaws and our Resolutions. We have never worked out a payment plan for anyone, except when the one house was being foreclosed and the bank was the player in that one. This is why I am adamantly not in favor of entering into any long-term plan with this homeowner. I MIGHT be willing to consider giving her till the end of June, in four payments, which is when everyone has to have paid in full. After that, full enforcement procedure will be pursued, which in our association is placing a lien on the property. I realize this does not get our money unless she sells. Our documents also allow for legal action of course but does not specify to type. But I'm not saying we will work out a payment plan with her. Before anything is considered she will need to come before the Board. Quite frankly, I suspect she won't have a lot to offer that is any different from what she has always had as excuses for not paying until she gets threatened with a late fee.

My instinct tells me to cut this homeowner no slack precisely because of her consistent history in never paying on time and always being tracked down in the last day of the grace period. What the rest of the Board thinks is another story. The VP is a former President so, brusque, flippant, and quick to condemn. The Treasurer is more moderate and forgiving. I'm all about protocol and reason. Among us we wind up reaching consensus on issues on which we may disagree, with me, many, many times bringing information I received here to the table. So, I wanted, again, to get a broad spate of opinion from those of us who manage HOA's to bring to the Board.

Sheila, this is great. Thank you so much. And, yes, we do have late fees. Our covenants allow for no more than 12% of the amount due to be levied. So, at the minimum, $175 is due on January 1, with a 30-day grace period. After that the $21 late fee is assessed, and another 30 days provided for payment. After that, if still unpaid, it goes into our full-enforcement policy, with the aforementioned, 1st phone call w/14 days to comply, 1st written notice w/14-days to comply, and final notice, written, with a date scheduled to appear before the Board. The annual assessment of $350 is due in full by June 1, with a 30 day grace period, and again the 12% of amount due, as a late fee. Since at $175 must be paid in January, we never have had anyone owing more than that, except, the one time a house went into foreclosure, nine years ago. Did I mention ironically it was this woman's house? Anyway, We tried a fee system in the past and realized that if they are not going to pay the first fee, they aren't going to pay the second,third or fourth. We decided that an expedient movement towards legal action was the better motivator. But I am going to take your system to my meeting tomorrow. It's clear, thorough and exact. It's also helpful, considered and forceful to the homeowner without being heavy-handed or the opposite, overly solicitous.

Dorothy