Delinquent accounts - whack a mole

Curious....

Is there any end to sending delinquent accounts to the attorney's for collections?

We have 274 doors in our community. We have sent about 5 accounts to collections in the 2.5 years I have been on the board, each which has taken about 6 months to a year to resolve. All have paid in full in the end.

Now, there are at least 3 other homes that have fallen behind on dues, and we're sending paperwork out to prepare more foreclosure lawsuits against these three. They'll take another 6 months to year to resolve.

By that time, I am predicting several other homeowners will fall behind, and we'll have to prepare more filings for those homes.

Is there ever an end to delinquent homeowners?

State laws are finally catching up with "whatever" Nevada law was changed about four years ago. HOA's still have somewhat of a super priority, but there is a caveat. The HOA is required to notify the mortgage
lender that they intend to foreclose for failure to pay assessments. The mortgage lender is then required by law to send the HOA 9 months of assessments in arrears.
It is now a cat and mouse game with deadbeats in the drivers seat.

All I can recommend is to remain vigilant and follow your state laws and pounce when you're able to strike, NO MERCY!!!

Well, you just summarized the last five years of my tenure on my board. I was treasurer and got as sick as you may be of seeing delinquencies and keeping track of what the attorney was doing. At that time we had a TON of them, thanks in part to the real estate meltdown of 2008 - the older cases were from a set of deadbeats the association had gone back and forth with since before I moved to the community! Thankfully, the economy improved and the mortgage companies began paying more attention. The board even managed to successfully foreclose on one unit, did some repairs and sold it at a profit (something I really don't recommend without A LOT of careful consideration.)

With people losing their jobs from various businesses cutting back or shutting down altogether because of COVID, I'm not that surprised some of your residents may be caught up. COVID also put a lot of people in the hospital or the morgue and so you have loss of income from a deceased spouse or not being on the job regularly (and then there's the filing for disability, which is another saga in itself). As you work through these delinquencies and foreclosures, note why people are falling behind - your collection policy may need to be tweaked a bit. You should also encourage homeowners to come to the board (or management company) if they have variable hardships like job loss - it is scary and embarrassing, but if they come forward and are willing to negotiate a payment plan, the association should be willing to listen. A slow penny is better than a fast dime.

At 274 homes, you don't have a huge problem, at least not yet. As everyone has said, the key is to address them quickly and early - the longer you drag your feet in getting it to the attorney, the harder it will be to collect. Once upon a time I read that accounts receivables should only make up 5% of the association budget, so totalling the amount owed and comparing it is a good way to see how you're doing. You should also be evaluating your collection policy from time to time, along with reviewing collection costs. It's not cheap to chase delinquent homeowners, especially if foreclosure is on the horizon (which opens yet another can of worms), so you want to make sure you get the biggest bank for your buck.

The number of delinquent accounts varies by HOA/COAs.
Factors can include economic, personal health and personal character.

I had one home owner who was always delinquent.
They would wait until we got an attorney involved.
It cost them more money then if they had initially paid.
It always seemed to cost the Association more money then we collected.

I never found out the reason behind their delinquencies.

Every time I lobbied for foreclosure (cut our loses and we would take a chance with the next owner), the board would be for it until they discovered it was a neighbor. Then the majority simply didn't want to pull the trigger.

As far as missing a single payment, everyone can be forgetful.

We made a rule for dues. People paid monthly dues with a $20 late fee charged 15 days late. We had a rule that 6 months we placed a lien. At a year we would CONSIDER foreclosure. (Foreclosure is ONLY a stop the bleeding step NOT a profit). With foreclosures you also have to factor in the rights of redemption. Meaning some states allow 0 to up to a year an owner can pay back their debt and get the property back. So a foreclosure can't really be "touched" during this time period by the new owners because the previous owner could buy it all back in that time frame. (Most likely not but legally a possibility). Plus a HOA never ever wants to own a foreclosure. (Bad idea).

Once we had that established rule of "6 months lien/1 year CONSIDER foreclosure" we had a way to gauge our lien/foreclosure rate. It also allowed for us to weed out those who were ignorant, intentional, or financial struggling. Found those who were financially struggling were most likely to make payment arrangements. We could work with them with a catch up program to avoid liens. The ignorant and/or intentional withholders liens/foreclosure threats were only way to get their attention.

Yes. It will be an ongoing "whack a mole" situation. However, if you set up a rule and everyone understands it, then it helps dealing with the situation. Otherwise those intentionally withholding are going to argue that the HOA is picking and choosing whom they make pay...

BTW: Never file a lawsuit to collect. Bad idea. A lien or foreclosure are much tougher and stronger options to enforce.