Using a collections company for past due accounts?

Michael,

I'd follow state statutes on collecting HOA dues to a Tee....which will mean you don't deviate from the collections path that leads to a foreclosure in the most extreme cases. It seems a complicated side path to involve collections agencies when the deliquent dues payer has signed his/her name accepting that they'll pay dues in the penalty of lien and beyond. This isn't retail debt.

However, check it out. Your board may not wish to be so direct on collections and prefer a circuitous route, which your privilege as a board of directors in setting local policies.

We do use a collections agency. Our PM company handles the first notices. Once it goes to the collections agency they handle it all, including filing the lien once the debt is over $1000 (Florida statute and our CC&Rs). Here's our process:

Dues late – 10th of the month
2-day grace period
Day 12 – letter sent by PM, late fee charged, 18% interest
30 days delinquent – reminder letter sent by PM with $10 additional fee, interest accruing
45 days delinquent – Official Notice of Late Assessment letter sent by PM saying the account will go to collections with $35 fee (must give 30 days to expire)
75 days delinquent – Notice expires, Authorization to initialize collections letter sent by PM, $150 fee added
77 days delinquent – account goes to attorney for collections.

At the point the account goes to collections, the homeowner can't pay directly to the PM company any longer. All payments must go to collections because oldest debt and all the fees get paid first.

The issue is that by the time the account goes to collections, the people either can't pay due to financial difficulties or they won't pay for whatever reason.

We only ever have a handful of accounts that go to collections, but our collections agent is a bulldog in going after people. My only complaint is that she's happy to keep them with a lien and trying to collect and I think we should go ahead file foreclosure when the debt gets to $3000 or so.

Michael

Based on your caviler attitude, if I were a member of your association, I would work to have you permanently removed.

I don't get it either. I don't think that collecting what is owed to an association (even describing it as "badgering the homeowner") represents a cavalier attitude. Nobody wants to do collections but board members have a fiduciary duty to collect that money.

It's one thing when someone can't pay their overdue assessments. We have one home where the taxes haven't been paid for two years. Nobody does that unless they simply don't have the money because they WILL lose their home. But if they can pay the taxes, they can at least attempt a workout to pay the association.

Max must have mispoken in that response, because I can tell you in my association we got crap for not being aggressive enough and cheered on when we tightened up the policy.

You're also not explaining yourself.

I put far more time, energy, and care into being a good board member than most other board members. Our board is more effectively run thanks to the energy that I put into it. You like to write with a lot of snark. I think it is because you feel I am a threat.

What I have noticed is that you prefer to be a hands on property manager so the board can be hands off. I am a hands on board member so the property manager can be more hands off. I have found that works better for our board, our community, and our neighborhood. I think the idea that I talk about how I relieve the PM of much of their obligations strikes you a bit as a threat to your business. You are afraid that if many other boards adopt the same philosophy, the work given to the PM company will decline, and eventually, the amount the Board is willing to pay the PM company will also decline, hurting your revenue stream.

I think this fear is probably well founded. I have thought many times about bringing our service level down to accounting only. I'm not exactly sure what services our PM actually does (except for accounting) that we can't do on our own. Probably accounting + compliance are the only reasons we pay them nearly $30,000 a year. Honestly, we should be able to pay them about half of that.

I have done a number of things to reduce the service level that our property manager provides. For example, I asked and she readily agreed that she does not need to attend our board meetings. They are in the evening and not purposeful as she sits there like a potted plant. I have taken over all vendor relationships. I take on all project management. I am starting to take on insurance and legal matters as well. Compliance, homeowner communication, and accounting are all that are left. Those items are safe for our PM company to keep handling. I don't want anything to do with them.

Michael, how many homes/units are in your association?

I am in the middle of a president who is in the process of displacing the property management company. He is taking it upon himself to take on many of the tasks you describe, as he apparently feels he can do it faster, better, whatever.

What he does not recognize is he is also displacing his Board. He pays them lip service by holding regular board meetings, we had one last Thursday. Once the owners forum was finished (none appeared, even on Zoom) and the meeting was called to order, he asked me to run the meeting. I sought approval of the preceding meeting minutes, and went on to the first item.

I got about 10 words out and he completely hijacked/ignored the agenda for the balance of the meeting. This was an agenda he had reviewed several days earlier and had approved with no changes. My meeting notes, and those of a colleague who takes the meeting notes for this association as no Board member can or wants to, make less than no sense.

He is interfering and damaging long established vendor relationships; he is making unilateral decisions affecting association funds without the approval of the Board. I am presented with invoices for work I knew nothing about. He recently spent 5X the money for a landscaping replacement than would have been spent at a local firm which specializes in that particular type of planting. 5X is not a big deal when spending a few dollars, this was 5X a $300 item.

I will speak with him later this week regarding his unilateral spending decisions, the board members do not have association or board experience and mostly have a deer in the headlights look in the board meetings. If questioned by owners, and if documents are requested, I do not have records which substantiate Board approvals.

He has spent over $30K in the last three months on projects, fortunately they were on the planning radar although there was no Board approval to proceed or allocate the funds. He is big on selecting who he thinks is the best vendor/contractor and gives short shrift to any other bids. He operates on information he has obtained 'off campus' so to speak from who know where; existing vendors except the utilities and sanitation services are deemed completely unsatisfactory and their work is to be constantly questioned.

Bottom line, your approach may be warranted and it may be time to renegotiate the contract with the management company. Do not do as my client is doing and run roughshod over the processes which have been established to protect the association and its owners.