Help with Late Fees ...

Started by PatR • 21 replies • 1355 views

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PatR (Florida)
Posts: 139

Posted:

I need everyone's opinion on this one, because I think that our memebership, would think as I do. But I could just be hardheaded, or overthinking it. So you will act as our membership in this "experiment"

As the treasurer, I will be calling for an increase in late fees and taking other measures to try to bring members current.

We have a BOD member who has been in arrears with every quarterly dues payment since I came on the BOD in April 07. Since we have a very high delinquency rate, we are going to increase the late fees, and speed up to foreclosure process. We have no choice. We have another quarterly payment due in July, and now have delinqencies of over $100,000. We will vote next week, when she still will be in arrears. When we vote, if she abstains or votes no, I will poll the BOD for their reasoning on their vote. Now she made a partial payment, which we usually will not accept, unless you have spoken to the PM and can prove a hardship. We have told her that she can plead "hardship", she must get documentaion, from a Credit Counseling Service, to prove to the membership that we are not showing any faroritism toward her. No one else, except for one member in 340 has done this.(made a partial payment). The PM wants to accept it, because if the account goes legal, one of the first questions asked is if we tried to work with the person to get them current. I have tried to explain that we are not the Bank,with an endless supply of cash, and we need cash flow; the money we budgeted, to pay the bills!

Our bylaws and the current Fl.law do not allow us to either ask her to step down or abstain from the vote. I have asked her, to please not vote, (she will vote no to the increase)to avoid embarrassment if someone in the community should ask for a list of those in arrears....We have not posted them, but they can be obtained. She refuses to step down, or abstain, and I my opinion, is angry that I am making such a big deal of this.

I look forward to all your responses, either way!

Have a safe Holiday!

Pat

MaryA1 (Arizona)
Posts: 7,043

Posted:

Quote:

Posted By PatR on 05/24/2008 1:42 PM
I need everyone's opinion on this one, because I think that our memebership, would think as I do. But I could just be hardheaded, or overthinking it. So you will act as our membership in this "experiment"

As the treasurer, I will be calling for an increase in late fees and taking other measures to try to bring members current.

We have a BOD member who has been in arrears with every quarterly dues payment since I came on the BOD in April 07. Since we have a very high delinquency rate, we are going to increase the late fees, and speed up to foreclosure process. We have no choice. We have another quarterly payment due in July, and now have delinqencies of over $100,000. We will vote next week, when she still will be in arrears. When we vote, if she abstains or votes no, I will poll the BOD for their reasoning on their vote. Now she made a partial payment, which we usually will not accept, unless you have spoken to the PM and can prove a hardship. We have told her that she can plead "hardship", she must get documentaion, from a Credit Counseling Service, to prove to the membership that we are not showing any faroritism toward her. No one else, except for one member in 340 has done this.(made a partial payment). The PM wants to accept it, because if the account goes legal, one of the first questions asked is if we tried to work with the person to get them current. I have tried to explain that we are not the Bank,with an endless supply of cash, and we need cash flow; the money we budgeted, to pay the bills!

Our bylaws and the current Fl.law do not allow us to either ask her to step down or abstain from the vote. I have asked her, to please not vote, (she will vote no to the increase)to avoid embarrassment if someone in the community should ask for a list of those in arrears....We have not posted them, but they can be obtained. She refuses to step down, or abstain, and I my opinion, is angry that I am making such a big deal of this.

I look forward to all your responses, either way!

Have a safe Holiday!

Pat

MaryA1 (Arizona)
Posts: 7,043

Posted:

Quote:

Wow, I'm so shocked at the amount of delinquencies I must have clicked "submit" before posting my message!

First of all, I'm hoping the increase in late fees is to apply to all delinquent members. Be careful to check state law and gov. docs b/4 doing this. In AZ, late fees are limited to the greater of $15 or 10% of the amount of the delinquent assessment.

Secondly, I think it unwise to not accept a partial payment. This is an indication of wanting to pay off the delinquency -- isn't that the assn's goal? Why should the h/o have to prove a hardship with documentation from a credit counseling agency? Not everyone experiencing a financial hardship has a credit problem! I think the board has to look at this objectively not just with the delinquent board member's situation in mind. I'm sorry, but I think your argument: "I have tried to explain that we are not the Bank,with an endless supply of cash, and we need cash flow; the money we budgeted, to pay the bills!" just doesn't hold water considering the amount of delinquencies the board has allowed to build up! I would think you would be happy to get whatever you can.

CharlesW1 (Georgia)
Posts: 826

Posted:

PatR,

I would have to agree with MaryA1, again! Some money is better than NO money. You certainly shouldn’t be given special treatment to “just” board members. Although, I would think someone in financial turmoil could make partial payments or some sort of agreed payment plan. I DON’T feel that proof of h/her financial hardship should be required either! NOT everyone (including myself) needs to pay/have someone else to tell them they are having financial difficulties, but that’s just me.

I personally (without knowing Fl laws or reviewing your governing documents) am hesitant to believe that “if” a member is in arrears, that they would still be eligible to vote?! That ranks right up there with some of the other provisions I have heard and read across the country!

With that being the case, I would be focusing my attention on amending my governing documents or by-laws in order to state otherwise. That’s absurd!

Chuck W.

Charles E. Wafer Jr.

JohnK3 (Pennsylvania)
Posts: 967

Posted:

Our Board put the following in effect a few months ago. Since then, we have had Zero delinquencies and all arrears have been paid.

XX HOA
Resolution regarding Late Dues

WHEREAS, Article V, Sec. 5.9 of the XX HOA Bylaws empowers the Board with the power to assess late charges for homeowners who do not pay assessment dues as due to the HOA,

IT IS RESOLVED,

1. Effective 01 April 2008, the current late fee of $15 per quarter is increased to $20 a month, that is, beginning 30/31 days after payment is due. The date will be determined by either a postmark on payments mailed to the PO Box or by actual delivery to one of the Board members.
2. If a household goes 180 days without tendering dues on or before the due date, or is otherwise in arrears, starting 02 January 2008, the matter will be transferred to a 3rd party for collection. Under the Bylaws, this process will cover not only the quarterly dues, amounts in arrears, and any late fees, but also all costs of collection.
3. The Board realizes that there may arise situations (financial setbacks, family illness, etc.) in which action should not be taken, so, by a unanimous vote by the Board, on a month-to-month basis, the Board may delay acting as described in Paragraph 2, though late fees will continue to accumulate.

RESOLVED & ENACTED by the Board this _____ day of ___________, 2008.

BradP (Kansas)
Posts: 2,640

Posted:

Pat:

I would accept partial payments...with that much money outstanding you have no choice IMO. There is nothing that prevents you from going into excecutive session and asking her to resign, at least that I am not aware of. I think your board president should have done that a long time ago.

MicheleD (Kentucky)
Posts: 4,491

Posted:

I'm not sure why you think accepting a partial payment either a) relieves her of late fees, since the full amount is not received, and b) keeps her as a member in good standing.

Partial payment is just that, partial payment, not payment in full of monies owed.

So, accept the partial payment and when the date comes for the late fees to be applied, if the entire amount due and owing is not on record, charge the late fee.

PatR (Florida)
Posts: 139

Posted:

We will only accept partial payments, if you are paying it forward. The increased amount of paperwork, accounting work, and the fact that we budgeted XX amount of dollars are all a consideration why we don't what partial payments. We are not citibank, and do not have enough cash flow, to start this practide.

Although, some will prove hardship, this is not the case with this BOD member.

Pat

MaryA1 (Arizona)
Posts: 7,043

Posted:

Quote:

Posted By PatR on 05/26/2008 6:10 AM
We will only accept partial payments, if you are paying it forward. The increased amount of paperwork, accounting work, and the fact that we budgeted XX amount of dollars are all a consideration why we don't what partial payments. We are not citibank, and do not have enough cash flow, to start this practide.

Although, some will prove hardship, this is not the case with this BOD member.

Pat

Pat,

I, for one, just cannot understand how you can continue to have this attitude with over $100,000 in delinquencies. Seems to me the least of your problems is allowing partial payments! Seems to me you should be seeking advice on how to resolve the high magnitude of delinquencies and seriously looking at how you got to this point and making drastic changes in your collection policy -- if you even have one! I certainly mean no disrespect here, but it appears to me the board would be welcoming any little bit they could get considering the state your finances must be in.

BTW, what increased paperwork/accounting work??? A payment, is a payment, is a payment. No increased paperwork (plus time, energy, etc.) if the HOA forecloses instead of accepting a partial payment?

BradP (Kansas)
Posts: 2,640

Posted:

Pat:

So if I am a member who is behind and I bring you a $500 payment for the $750 I owe you won't accept it???? Pardon me while I scratch my head...perhaps that alone explains why you are over $100,000 in the hole. How is accepting partial payments acting like a bank, not accepting them is more like a bank. You look at any reputable business in America and if you have balance and walk in with a partial payment they will accept it. It doesn't forgive your debt, but these businesses know that you take money when you can. I think you need to take a serious look at your policies and examine why people are behind. Most often it is because they are facing money troubles and perhaps all they can do is pay a little at a time...JMO

PatR (Florida)
Posts: 139

Posted:

Brad:

Out of 340 homes, only two have requested partial payment help, one had a hardship, and the other took it upon herself.

A lot of our problem is absolute nonpayment. All are either heading for or are in delinquency. We have several people walk away from their homes. About 15 all in forclosure (bank)

We do not have enough cash flow for 340 people to make arbitrary payments. We budgeted X amount per quarter, and people are expected to pay that amount, unless they come forward to either the PM or the attoreny with a hardship.

People know how to work the system....at the expense of others.

Pat

MicheleD (Kentucky)
Posts: 4,491

Posted:

I am so with Brad on this one.

It is just bad business sense all the way around to refuse partial payments, except for paying ahead or prepaying.

Is it a "policy" or is it written specifically into the CC&Rs or by laws? And if it is in them, please share the content with us. I have to see how something like that is written.

GlenL (Ohio)
Posts: 5,491

Posted:

I can see the news report when the HOA forecloses for non-payment or trying to explain it to the judge.

Why did the BOD allow it to get to $100,000 and how many homes are past due? Is this from unpaid assessments or fines? If it's from assessments why hasn't the HOA foreclosed on these delinquent homeowners?

Studies show that 5 out of 4 people have problems with fractions

PatR (Florida)
Posts: 139

Posted:

Again, we only have 2 out of 340 who have asked for help with payments, while still in the control of the PM and the BOD. Once it goes legal, partial payments are encouraged and excepted (the courts want to see that you are working with the homeowner). Remember, legal fees are expensive.

Most of our delinquencies are from foreclosures, and those heading there.

BradP (Kansas)
Posts: 2,640

Posted:

Pat:

Why let it get to legal before you accept partial payments. Your question centered around the BOD member who wanted to make a partial payment. IMO even if you only have 2 people doing partials the HOA should accept any and all money even if it is a $5 bill. Your HOA should also have steps in place to deal with delinquent BOD members.

PatR (Florida)
Posts: 139

Posted:

The state statutes trump our Docs. As of this moment in time, we have no legal recourse to ask her to step down. As she knows it.

As far as partials go, the person has to reach out to the PM to make arrangements and so far, only two have. I guess people don't even have enough cash flow to make partials. Sad....

MaryA1 (Arizona)
Posts: 7,043

Posted:

Quote:

Posted By PatR on 05/27/2008 6:26 AM
The state statutes trump our Docs. As of this moment in time, we have no legal recourse to ask her to step down. As she knows it.

As far as partials go, the person has to reach out to the PM to make arrangements and so far, only two have. I guess people don't even have enough cash flow to make partials. Sad....

But, Pat, the PM doesn't make the rules; only enforces those rules made by the board. Perhaps no one has asked about partial payments because the board has said they won't accept them????

MaryA1 (Arizona)
Posts: 7,043

Posted:

Sorry, I clicked "send" too soon.

You said the board Pres wanted to make a partial payment. Isn't that what started this whole thread?

PatR (Florida)
Posts: 139

Posted:

This is the first time the PM (who is fairly new) has brought it to our attention that someone requested a partial payment. He accepted it, with the stipulation that she would be paid in full by July 1, when the third quartlerly installment is due.

This is a cycle, and she (the BOD member) is never current.

Someone may ask to see the records, and the BOD will be called out for accepting partial payments and having a BOD member who is past due. Both of which, in my mind should be a no no for a standing BOD member.

She can be late, and make partials, but not while serving on the BOD....my feeling

BradP (Kansas)
Posts: 2,640

Posted:

Quote:

Posted By PatR on 05/27/2008 8:48 AM
This is the first time the PM (who is fairly new) has brought it to our attention that someone requested a partial payment. He accepted it, with the stipulation that she would be paid in full by July 1, when the third quartlerly installment is due.

This is a cycle, and she (the BOD member) is never current.

Someone may ask to see the records, and the BOD will be called out for accepting partial payments and having a BOD member who is past due. Both of which, in my mind should be a no no for a standing BOD member.

She can be late, and make partials, but not while serving on the BOD....my feeling

Pat I agree...she can be late and should not serve on the BOD at the same time...I don't know Florida law so I can't speak intelligently on your options with her. I do think that your members would be upset that she offered money and it was rejected.

There is a difference between setting up a payment plan with someone to catch up and a person just dropping off a partial payment on their dues. I am not in favor of a payment plan unless circumstances warrant it for a short time. I am in favor of accepting any and all money that is dropped of even if it doesn't cover the whole bill. By accepting it the Board is not saying that payment plans are ok.

HaroldS (Arizona)
Posts: 906

Posted:

I don't understand: Doesn't your documents require a board member to be in good standing? How can she be in good standing if she's habitually delinquent?

KirkW1 (Texas)
Posts: 1,665

Posted:

I think your best course of action is a radical change in direction. Instead of waiting until legal to get partial payments, you should seek them out. Just cover the expense of doing so by charging the appropriate fee to the homeowner.

You may also want to double check with your attorney concerning the no partial payment rule. In some cases refusal of partial payment can negate the entire debt.

I am glad that you are not on my HOA board. We are trying to make our community more friendly. And telling people they must prove hardship if they don't have the money and yet want to get out of the situation seems down right mean spirited. It is also part of the reason you have $100,000 in unpaid dues.

You might want to consider that the block of people who owe money could become a controlling factor in the next election. And your board member may be their ring leader.

Finally, if you accept partial payments with the stipulation that the extra costs of collecting such is to be paid by the homeowner and actually seek those out, you are bound to find more then the one board member willing to make a partial payment. And your responsibility is to the health of the HOA not to your personal agenda of bashing those who might be short on cash flow themselves.

Kirk

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