Collection Policy

Our association is required to have a Collection Policy and post it for members on a yearly basis.

The (mostly new) board recognized this in January. A collection policy was requested from the long time treasurer.

The board suggested many references, and supplied language including state code. We listed late fees, reasonable attorney's fees, collection costs, costs, penalties and interest as topics to be addressed.

This week, we have received this collection policy:

"I have tried to work with you every year, but do not understand why you will not contact me when I do try to help. If I have to go to The county (sic) and put a lien on your property it will cost you an additional $25.00 to put the lien on PLUS another $25.00 to take the lien off. So now your $50.00 landowner dues go from $50 to $100.00 and the lien will not be taken off it, if you do not pay that $50.00. I am still willing to work with you BUT you have to contact me. My email address is: XXXXX
If I do not hear back from you either with your landowners fee of $50.00 or an email I will be having to put the lien on. According to the By Laws I can also put penalties and interest. Again I am still willing to try and work with you."
Name of Treasurer

If it's permissible to upload a redacted 'budget' that was submitted by the treasurer. The collection policy isn't the only thing misunderstood, and we are making no headway.

When do directors begin the discussion to remove of an officer? Should they? We can wait till the annual member's meeting and hope, while creating a balanced budget & collection policy to use, but at what risk?

Tammy

First, I believe the Board in its entirety must approve a collection policy, and in front of all members at an open meeting. It is not something a Treasurer can do unilaterally.

Second, I find the 'collection policy' you posted (from the Treasurer) difficult to understand. Though I think I get the drift of what the Treasurer wants to do. I would re-write it to something like the following:

______________
Board Resolution 2019-___
"After proper notice, the covenants for Green Acres HOA at Section ____ authorize the HOA to collect dues. The covenants at Section ___ also authorizes the HOA to (a) impose penalties, interest and collection costs; and (b) place liens, on those lots that are in arrears.

Below are the exact steps the HOA will take to collect dues.

Should you have any questions about this, please contact the HOA at XXXXX .

Dues Collection Procedure, Green Acres HOA
1. Once dues are 10 days in arrears, interest begins to accrue. The lot owner's monthly statement shall reflect this. If a monthly statement is not sent to all lot owners, then the owner who is in arrears shall receive a formal notice that she or he is behind for every month the owner remains in arrears.

2. Once dues are in excess of three calendar months in arrears, the HOA will send a notice that a lien will be placed on the lot.

3. Beginning on the first day of the fourth calendar month an owner is in arrears, the HOA will have the right to place a lien on the lot and bill the owner an additional $50, to cover the County's cost of placing and removing the lien.

4. The HOA reserves the right to use a collections agency or collections attorney to collect dues, to the extent the law allows.

5. Interest will accrue on the entire cost to collect the dues in arrears.

6. The interest rate imposed on monies owed the HOA is ____.

_______

I would recommend that the Board not approve the HOA Treasurer as the person who receives communications directly from members on this.

This would possibly put the ball in the Treasurer's court: If the Treasurer feels he or she is being usurped yada, then maybe he or she will simply resign.
_______________

My experience says:

1. That until correspondence/threat arrives from an attorney most will ignore it especially just a letter form the association.

2. One to two months late, association letter introducing the prospect of liens, credit bureau reporting, and foreclosure as soon as possible

3. Two to three missed payment periods a warning letter (mentioning liens, foreclosure, credit reporting) from the association attorney but no action taken. Just threats.

4. Three to four months late. Letter for attorney saying a lien has been filed plus additional threats of credit reporting and foreclosure has begun.

5. Four to 6 months action up to the association.

Above timeline can vary depending on payment periods but once 6 months late, no matter the payment schedule, come down hard on them.

Your time and your example are greatly appreciated

"The Board of Directors acting for the Association" is not a concept that is well received by long time directors, no matter how many times it's mentioned. At. Every. Meeting.

Our docs dictate loss of vote when in arrears. Could/should this also be noted on the collection policy?

CCRs state:

Section 5: EFFECT OF NONPAYMENT OF ASSESSMENT FEE & REMEDIES OF THE ASSOCIATION. Any assessment fee not paid within 30 days after the due date shall result in a lien, subject to foreclosure upon the lot assessed.

THE END!

Treasurer: "Why do we need a collection policy? I've charged late fees in the past and no one has ever paid them."

Board: "Statute dictates we must have a collection policy. Documents do not allow for late fees. Determine if the amount of the late fee you are charging is legal, and we can create a 'late fee' policy that can be enforced." The board suggested determining the latest payments received (generally not more than 3 months out) and calculating a definitive timeline that reflects our actual needs. 90 days seems equitable, much like your example, that I will use (with permission)as an example for 'collection policy' as well as a fine example (for me) on how to properly REDACT a document.

Very nice. Thanks again.

You definitely need a new treasurer, sooner rather than later, so I'd push for that as well as those out of state records. And then have them audited to ensure no funny business has occurred. In the meantime, remind this one that she doesn't decide policy all by her lonesome - all of you need to be reviewing a proposed policy and voting on it.