Collection Activity

This doesn't really answer your questions, but a couple things to consider:
- Your quarterly assessment isn't substantial enough in my opinion to involve any entity (lawyer, collections firm, etc.) which will cost you more money than collecting the $40 or $80 is worth. While it is possible to pass the costs of that on to the delinquent homeowner, that also may be difficult to collect, further compounding your issue.
- Consider (if possible) making your assessments annually due. Chances are the $40 is such a small amount and paying quarterly is annoying and simply forgotten. Paying annually will help to get all your annual money in pocket up front. If not paid, any attempt to collect will require the full $160 due as opposed to only $40, making the effort to collect a bit more worthwhile. Further, for those who choose to be deadbeats, you're only chasing them once/year for a slightly larger amount instead of 4x/year for a tiny amount.
- Agree you need to do something to enforce the payment requirement. There are some people who only comprehend this when it's more heavy-handed. If your secretary is opposed to your ideas, suggest she pay the assessments of those who choose not to and see what she thinks then. She can spend her time playing nice with them to get her money back.

Scott

We have an attorney who for about $100 will write a threatening letter. One threatening a Lien and foreclosure if back dues not paid. If they do not pay the lawyer files lein and adds $495 (his fee). We have never gone to a foreclosure. You might look for an attorney like this.

You say you can add interest but if you read closer, you can probably add additional costs such as the lawyers $100 fee.

Thanks. We can collect the attorney fees along with any additional costs for collections. We charge a late fee fine of 7% or $5, whichever is greater, on past due balances.

Hi Scott

Let's say that you have a homeowner who hasn't paid in 2 years. She owes $320.

Let's say everyone else takes you up on the 10% discount. You've given up $576 each year or $1,152 over the same 2 years.

In your shoes, I would focus on the $1,152 rather than the $320. Is the discount necessary? Is it authorized in your documents? Yes your HOA is a business, but you can't operate outside the parameters of what your docs allow you to do, and giving a 10% discount for early payment might violate what you can do.

The only way to judge the effectiveness of your 10% discount is to see if it has had any real effect on your delinquencies. If not, maybe you're giving away too much.

Also, can't tell from your description if you have 1,2,3, or more long term delinquencies. Makes a difference.

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Scott,
A few other things to think about . . .
With only 37 homes, the ability to revise your governing documents with the necessary number of homeowner "yay" votes seems doable. Also sounds like most of your neighbors pay on-time and in-full and may be agreeable to changing the documents to be more in your (the Board's) favor. I suggest coming up with a way to convey to the membership the positive effects of dues being changed to annually required as well significantly increasing the penalties for non-payment or late payment. If nothing else, it will further convey to the handful of folks who choose to not pay or to pay late . . . that they will end up paying substantially more through their actions. Doing so would make any attempts to collect money owed that much more "rewarding" and worth the effort.

I agree with you that HOAs have to be operated as a business. What makes this tricky is that you are also neighbors. and no one wants to put undue pressure on a homeowner who's already behind. On the other hand, letting this person go without paying while everyone else does means the rest of you are indirectly paying for the services she also receives from the association. That is unfair and if the board doesn't address it (like the last group failed to do), everyone's property values could take a hit and then where would you be?

I know delinquencies are unplesant to deal with because I was treasurer of my association for five years before I stepped down. I always tried to balance compassion with the association's best interests, which is why I'd make it clear to everyone, especially delinquent homeowners, that it wasn't personal, just business (a la the Godfather, minus the bullets, throat cutting and all that).

If the delinquent homeowner wants understanding from the board, he or she had to be straight with us and let us know why the assessments weren't being paid (e.g. job loss). As long as you didn't avoid us, told the truth and made an effort to pay, we would work with you. When you didn't, then I would persuade the board to do the same thing any other creditor would do if it wasn't being paid, which might include things like turning the person over to a collection agency, suing him/her or even the nuclear option of foreclosure. A nasty business, but you understand that as treasurer, you have to consider the entire community. What would happen if everyone else stopped paying?

If the rest of the board goes along with you, I won't worry about the secretary