HOA Fees: Bill Monthly or Quarterly?

Our CCRs specify that dues are due monthly, and originally that's how most homeowners paid them. Since we have always been self managed and the books are maintained by the treasurer, that was a lot of work. About a dozen years ago or so, in the dues notices, the board started requesting homeowners pay annually if possible, bi-annually or quarterly if not. The carrot was that all of the work was being done by the volunteer board, and we wouldn't need to take on the expense of a management company if people would pay quarterly or annually. Beyond that, many people would just rather write checks less frequently. We didn't change the CCRs, so technically members can still pay monthly, but at this point, only one out of 65 homes does. Even they have said they would prefer to pay quarterly, but with two young ones, their finances are tight. I'm happy as long as they keep paying

One thing that helps is that our dues are relatively low, currently $530/year. If they were $200/month, I'm sure more people would want to pay monthly. You mention billing, we don't send bills per se. We post a notice on the community sign board by the exit gate and send reminder emails. The emails include the quarterly, bi-annual, and annual amounts (as appropriate for the given quarter) and don't mention a monthly amount. If members ask about monthly, we do give the the monthly amount. We have a master email list with all addresses, and then create subset mailing lists for the quarterly and bi-annual members so the annual payers don't get the quarterly and bi-annual emails and the biannual members don't get the quarterly.

We establish an annual amount for the assessments and provide a payment booklet for monthly payments based on that amount. Our CC&Rs specify monthly assessments. Therefore, if we were to change it would require amending the CC&Rs.

As with Douglas, only about 40% actually pay monthly. Otherwise some pay quarterly, once every two months or simply pay it all at the beginning of the year.

Two perspectives on this question:

1. In the Association we manage, the assessments were originally billed quarterly. The quarterly assessment was $42.00. Once the association was turned over to the homeowners, and the board realized the expense of billing quarterly, payment books, etc., the billing was moved to semi-annually, which was allowed as an option in the CC&Rs. The semi-annual process was implemented via statements mailed to property owners about 35 days prior to the due date, the coupon books were no longer used. The change from quarterly to semi-annually did not go smoothly (we were not the MC at the time but were residents)for reasons I never understood. The Board recently directed the MC (us) to implement an electronic payment process option, which was done, with semi-annual and annual payment options. The implementation and tracking of the annual payment option was simple, the accounting system disburses the funds into current and prepaid accounts for reporting purposes. Even before that, a few property owners paid annually. The mailed invoice process was retained as it is required in the Governing Documents.

2. The Association in which we reside requires payments to a master association and a sub-association. The master association sends annual statements. The sub-association sends statements quarterly but with a variety of paper and electronic payment options. The master association charges $1,000.00 annually, the sub-association $996.00 annually, payable quarterly. This works fine as far as we are concerned, some portion of the sub-association pays annually, the rest quarterly.

To respond to your question: Given that 60% of your association is presently paying semi annually or annually, I recommend you move to semi-annual billing/payments with an annual payment option if desired. Interest rates are so low, any interest lost by the homeowner on small sums such as these is negligible. A semi-annual process will reduce the expense of billing monthly (if that is done), reduce the payment processing workload by up to 50%, with next to no negative impact on association processes and minimal impact on cash flow. If your assessments are quite large, then perhaps quarterly is the appropriate interval in recognition of property owner cash flow management.

Hi Karen

The rule of thumb we shoot for is 100% of our reserve needs (to cover long term replacements and repairs) plus 90 days of operating expenses.

But since we have yet to achieve 100% funding on our reserves, we are still building our bank accounts so that we will have sufficient funds set aside for some major expenditures down the road.

Karen,

Expecting that your savings is your Reserves, the amount needed should be based on a Reserve Study.
For more information on Reserve Studies see:

http://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/103517/view/topic/Default.aspx

Our Association also maintains an amount equal to 1 month normal expenses in our operating fund at the beginning of the year. This allows a cushion to make up any difference between bills that are due and assessments that haven't been received.

Tim