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Payment plans and pool access

Started by DwightT • 36 replies • 2561 views

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DwightT (Idaho)
Posts: 664
Posted:
Our dues ($400/year) are assessed as of Jan. 1 with late charges beginning on March 1. In the past our policy has been that while we don't really do payment plans, we won't go to collections as long as the homeowner is making an attempt to get the assessment paid by at least making consistent monthly payments. We do charge interest on any unpaid balance though.

In addition, any property with a balance of over $30 will have their pool access disabled until the balance is paid. This has usually encouraged people to get their dues paid before the pool is opened for the season.

However, with the current economic situation we are starting to receive more requests for payment plans, with some stating that even $50/month will be a hardship. Again as long as they keep up with the payments we will probably charge the late fees but not go to the delinquent collection process, but what about the pool access? At $50/month, these homeowners won't get their dues paid off until after the end of the season. We do need everybody to pay in order to keep the pool in operation, but money is tight for everyone and hopefully these people will at least make regular payments. Has anybody else tackled this type of issue yet?
RobertR1 (South Carolina)
Posts: 5,164
Posted:
Dwight,
It seems we have been having a discussion about the powers of the Board. If I understnad what some interpret these powers to be, then it really is not a matter for discussion outside the Board meetings. If the board reaches consenus about any matter they consider to fall under their purview, their decision is the correct one. So if the delimmea of deciding the intention of the documents rears it's ugly head, just go with the Boards perogative to declare the subject a Board decision.
DwightT (Idaho)
Posts: 664
Posted:
There is no question that the Board can decide whether or not to restrict access. That is covered by our documents. My question was given the current economic situation, what have other HOAs done? We can be hard-assed and say no exceptions (and tick-off half of the members for not being human), or we can be soft and allow full access anyway (and tick-off the other half for being patsies). I would like to see if others have encountered or thought about the issue and come up with a middle-ground solution (thus ticking off everyone ).
MicheleD (Kentucky)
Posts: 4,491
Posted:
Quote:
Posted By DwightT on 01/07/2009 1:16 PM
There is no question that the Board can decide whether or not to restrict access. That is covered by our documents. My question was given the current economic situation, what have other HOAs done? We can be hard-assed and say no exceptions (and tick-off half of the members for not being human), or we can be soft and allow full access anyway (and tick-off the other half for being patsies). I would like to see if others have encountered or thought about the issue and come up with a middle-ground solution (thus ticking off everyone ).

Seriously?! "Not being human" - for running a business, or at the very least, a professional organization??

If your board's charge is strictly social in nature, then I can see where that perspective can emerge.

But my guess is your charge is not strictly social in nature and involves some sort of fiduciary duty to maintain certain elements, etc.

The swimming pool being one of those.

The fact of the matter is that the financial needs of the association don't change because the financial situation of some of its members do.

If it is rampant enough that it impacts as many people as you seem to think it will, which I don't believe it will, however, I do believe people will take advantage of such a "grace period" if they can, then perhaps the entire budget needs to be re-thought and serious cuts in several places should be made.

Our electric company won't give us any grace period on the utility payments due because our association members might not be paying as diligently as they used to.

We still have to pay the bill by the 18th of the month, each month, regardless.

RobertR1 (South Carolina)
Posts: 5,164
Posted:
Michele,
Out of the mouth of Babe's, etc, etc.

But to be serious, I really, really believe you have pushed the right button. If the Boards feel they have to make concessions about how much money they need to operate on,(and that is their mandate) they MUST equalize these payments, which means cutting the budget and making payments less for all.

George posted a link to the Miami Herald about what is happening there and it is scary. Nothing the Board could have done would have saved their situation and if the Board decided to operate in a compassionate mode I am sure they abetted the time line for their demise.
The OP of this thread is looking for innovative or proven ways to stem the tide. Michele opined the short term out look is not as dire as some predict. Iit is certainly not going to be uniformly spread, so her advice is to consider lowering the assessments for all...............tighten the belt of the organization. That is a very bitter pill for the Boards to swallow, it may be the saving grace in some instances.

Thank you Babe!
MaryA1 (Arizona)
Posts: 7,043
Posted:
Dwight,

Do your gov. docs. state the assessment must be paid yearly or is this a board decision to make? If the latter, perhaps changing to monthly payments might solve some of the delinquency problems. You state even a %50/mo payment plan would pose a hardship for some; but the $400/yr assessment is only $33.34/mo.
RobertR1 (South Carolina)
Posts: 5,164
Posted:
MaryA,
Correct me if I am wrong................Please.
Didn't we just finish a thread that closely resembled this thread and the conclusions by you and others, seemed to be that this kind of a situation was a Boards decision and because the Board was empowered by the langauge in the documents they could circuvent certain requirements?

Why does this Board, if they decide to take the compassionate route and require less from this special group of owners, I think the term used prior was "hardship cases", why then; in this thread, does the board have to worry what the documents state? Maybe I read all this wrong and you all weren't saying the Board did not have this encompassing power.

What do you think of Michele's position about this thread (above)?

Dwight does bring to the forefront again that times for the HOA are going to dictate some very hard choices will have to be made.

RobertR1 (South Carolina)
Posts: 5,164
Posted:
Correct above..........sorry circumvent instead of circuvent

2 para last line should read: Maybe I read all this wrong and you all were saying the Board did not have this encompassing power.

sorry again
MicheleD (Kentucky)
Posts: 4,491
Posted:
Robert, I do feel I need to clarify one thing for you.

I do not advocate lowering the assessments (or dues) for all, only lowering what expenses the assessments fund.

In other words, if the pool is costing XXX amount of money, and will suffer because too many people will not be paying enough into the "kitty" for the pre-season work or the early season work to be done on it, then perhaps it's time to eliminate the pool altogether.

Or eliminate something else in the budget.

Or eliminate several things in the budget.

But the bottom line for me is what I said earlier in the post.

Let me paraphrase:

"There's no crying in baseball."

In other words, if the HOA is not a social organization, but has a business purpose, then whether it has a "heart" in dealing with it's revenue and expenses is moot.

It's the numbers.

This is a business, it's not a charitable organization.

There is not easy answer. But the emotion should be removed from the equation.

GlenL (Ohio)
Posts: 5,491
Posted:
Dwight, how many of your members are asking for this and how are your late charges computed? If there is not an inordinate number requesting a payment plan I would tend to grant it. With the understanding (in writing) that any missed payments bring the balance due at once and that any missed payments will cut of access to the pool. We don't open our pool until Memorial Day here so by then the H/O should have paid $250 @ $50 a month. That is unless your pool is open year round then I would restrict access until a significant percentage is paid.
Studies show that 5 out of 4 people have problems with fractions
RobertR1 (South Carolina)
Posts: 5,164
Posted:
Michele,
I sure wish someone would explain something to me.

Below was posted by George in another thread and this is his advice on:
*********************************************
The annual expense budget should be based, therefore, on the expectation of $49,000 in fee income, not $50,000.

It is not a good practice to budget income under the assumption that every unit will pay up. You have to allow for the potential that some units will not pay. Therefore, your expenses must reflect the lower estimate of income.

This is pretty much Introductory Accounting 101 (debits by the window, credits by the door).

Does it result in higher dues for other owners? Yes, if the expenses are based on income of $50,000, rather than $49,000.

However, if you budget expenses at $49,000 to break even and those doubtful accounts pay up, the association is ahead $1,000.

I am not entirely satisfied with this explanation, but I don't know how to do it any better.

*******************************
Now if this is Introductory Accounting 101, how can associations lower their expenses without lowering the assessments, if the expenses are based on income to break even, doesn't that mean lowering the assessments?

I am suggesting that due to these extraordinary times, some associations may have to lower assessments because they can not provide the money for the budget items as normal. Do as you suggest, cut pool amenity, cut landscaping costs, etc. It is only a suggestion, nothing more and may work is specific cases in HOA's where the assessments are small per month. I am not sure this would give folks in trouble the relief they need to stay afloat.

Some modification of lowering the assessment rate in condos, given that the buget has to reflect expenses to break even if expenses are cut, it would appear you would have a harder time cutting expenses enough, thus lowering assessments, to save any of those in trouble.

On reflection and from experience it is going to be Accounting 101 be damned, each individual association that is going to have to deal with this and plenty that are dealing with this are going to have to do the best they can to maintain the association. Given this scenario, I suppose I am would have to widen my approval on the discretionary power of the Board, they may be forced to work outside Accounting 101.

MicheleD (Kentucky)
Posts: 4,491
Posted:
I rarely advocate lowering assessments. There are very few scenarios where I envision that would be an appropriate action.

The budget was set to allow for $XXXX in assessment collection.

It's not just a function of $$$, it's a function of time, too.

Which is one reason why our governing documents mandate when assessment notices are to be mailed and the due date for the payment.

These people aren't necessarily asking not to pay, simply [apparently] wanting to not pay at the [budgeted] time.

This puts extreme stress on a company's budget.

One of those stresses in this case is apparently the timing of the expenses of the work that needs to be done to open and run the pool.

So.

The association will probably likely get some or most of what it budgeted for, just obviously weeks and/or months after when it needs it in order to effectively run its amenities.

Well.

Then, if the homeowners are having problems funding the expenses of the organization, then the expenses should be cut.

You're not cutting them to a level that allows for a reduction in assessments, rather you are cutting them to a level that allows for the cash flow that is coming in.

Accounting 101?

If you are bringing in $100, but have expenses of $150, then $50 in expenses must be cut to bring them in balance with the $100 revenue stream.

Why would you then lower the revenue stream because you had to cut expenses?! You didn't cut them to a level lower than the income.

If you based your $100 budget on what you thought you were going to bring in, but it turns out that it is going to actually be less than what you thought, because people are now coming to you and saying they can't pay or need to pay after your expenses are due, well, you would still have to cut the expenses.

Hope that clarifies it.

MicheleD (Kentucky)
Posts: 4,491
Posted:
Here's another point, Robert, under George's budgeting practice, how would you base the revenue to account for non-paying units?

Do you just write a bunch of numbers on pieces of paper and pull one out of the hat and say, "This year the magic hat says 20 units won't pay." So then you budget accordingly?

Or, do you look at the history of the past years and figure the number of units not paying based on something close to what the history shows?

For example, we have historically had a 4.6 percent delinquency rate. Some years it was 2%, one year it was 11%. But that was one of the first years. otherwise it's been no higher than 5%.

What do we base our budget on? An arbitrary number, or something we estimate based on the history?

Now once we set that, and it turns out we were wrong, and suddenly we've got 10 times that number of people wanting to delay or not pay, now what?

We have to make some tough choices. We have to make some serious cuts because the $$$ just won't be there or won't be there when we need it to be there.

That's where I'm saying the cuts need to be. You don't then turn around and cut your revenue stream even lower.
RobertR1 (South Carolina)
Posts: 5,164
Posted:
Michele,
Thanks for your responses, I find them very helpful.

The possibility of your conclusion in paragraph next to bottom of your post; concerning the tough choices that may have to be made, and if the papers are right, they are happening as we speak, then these tough choices are by necessity to save or protect the association, may well fall outside accounting 101.
RobertR1 (South Carolina)
Posts: 5,164
Posted:
Michele,
I wasn't going to ask this, on consideration, it seems important.
Your last sentence in your last post.
Wasn't the intent of all this to try and figure ways to make this threatening situation as fair as possible. Offering to lower assessment or payment plans to certain individuals (hardship) so they can stay in their home, doesn't that lower income stream, and can the Board lower these assessments enough that it will allow people to stay in their homes?
Tough choices again, so doesn't each association have to make those tough choices by the mandate of their position that they protect the association first. (Fiduciary responsibility)
MicheleD (Kentucky)
Posts: 4,491
Posted:
Short answer: No.

They may have a lot of "discretion," but most governing documents are pretty clear: each owner pays the same rate. Period.

DwightT (Idaho)
Posts: 664
Posted:
Quote:
Posted By GlenL on 01/07/2009 10:50 PM
Dwight, how many of your members are asking for this and how are your late charges computed? If there is not an inordinate number requesting a payment plan I would tend to grant it. With the understanding (in writing) that any missed payments bring the balance due at once and that any missed payments will cut of access to the pool. We don't open our pool until Memorial Day here so by then the H/O should have paid $250 @ $50 a month. That is unless your pool is open year round then I would restrict access until a significant percentage is paid.

Glen - I think you are the only one who responded to what I actually asked. Maybe I did a poor job of explaining the situation, but we are not looking to give people waivers or reductions or anything else on paying their assessments. That was never part of the equation. Every homeowner is responsible for paying the full assessment amount, and starting March 1, we will be charging a late fee at a rate of 18% on the balance due.

My original question only had to do with access to the common area pool. Our pool also opens for the Memorial Day weekend, so as you noted, even at $50/month they should have paid at least $250 of the $400. As I mentioned, in the past we restricted access for any account with more than a $30 balance. This not only encouraged those who had not paid their assessments to pay up, but it also gave us another tool for CC&R violations - part of the enforcement process includes a certified letter, which results in a $20 charge. A couple of those and they lose access to the pool as well.

Again, normally we would tell people that if they pay late then there will be an interest charge on the balance, and they would not have access to the pool until it is paid in full. In the past we would also start the collection process (starting with a certified demand letter) if the assessments were not paid in full by July 1. We will still be charging the interest fee, but with the number of people who have been asking about payment plans already we probably won't start the collection process as long as they are current with their payments.

As to how many - 5 so far, and the invoices just went out last week. Normally we have maybe 2 for the whole year, and that's only after the demand letter is sent. I'm glad to hear the bad economy isn't having an impact on some areas, but that isn't the case around here. We aren't in as bad a situation as some of the worst areas of the country, but there have been several large lay-offs and a lot of people are looking for work. We currently have about 15 empty houses (out of 313) that we probably won't see any payments from until they are sold. We'll go through the regular collection process, but it will still take time (if we can even find the owners).
MaryA1 (Arizona)
Posts: 7,043
Posted:
Quote:
Posted By RobertR1 on 01/07/2009 5:37 PM
MaryA,
Correct me if I am wrong................Please.
Didn't we just finish a thread that closely resembled this thread and the conclusions by you and others, seemed to be that this kind of a situation was a Boards decision and because the Board was empowered by the langauge in the documents they could circuvent certain requirements?

Why does this Board, if they decide to take the compassionate route and require less from this special group of owners, I think the term used prior was "hardship cases", why then; in this thread, does the board have to worry what the documents state? Maybe I read all this wrong and you all weren't saying the Board did not have this encompassing power.

What do you think of Michele's position about this thread (above)?

Dwight does bring to the forefront again that times for the HOA are going to dictate some very hard choices will have to be made.


Robert,

No offense meant, but it appears you are very confused. I never said the board can just "circumvent certain requirements" contained in the gov. docs. What I said is that in many instances the documents do not state the board "must" do such and such, rather they state the board "may" do certain things, thus giving the board the option to do what they think is most prudent. By taking the compassionate route with hardship cases, the board is not circumventing the documents. These hardship cases will still be required to pay the assessment but may be given a longer time to pay or a payment plan may be offered to make it easier for them. Oftentimes, the board will waive the late charges which are not "required" to be levied and does not equate to a loss of revenue for the assn. (Late fees should never be a line item in the budget!) I can't imagine any member of the assn complaining about a procedure such as this if it is offered to all hardship cases.
MaryA1 (Arizona)
Posts: 7,043
Posted:
Quote:
Posted By RobertR1 on 01/08/2009 2:19 AM
Michele,
I sure wish someone would explain something to me.

Below was posted by George in another thread and this is his advice on:
*********************************************
The annual expense budget should be based, therefore, on the expectation of $49,000 in fee income, not $50,000.

It is not a good practice to budget income under the assumption that every unit will pay up. You have to allow for the potential that some units will not pay. Therefore, your expenses must reflect the lower estimate of income.

This is pretty much Introductory Accounting 101 (debits by the window, credits by the door).

Does it result in higher dues for other owners? Yes, if the expenses are based on income of $50,000, rather than $49,000.

However, if you budget expenses at $49,000 to break even and those doubtful accounts pay up, the association is ahead $1,000.

I am not entirely satisfied with this explanation, but I don't know how to do it any better.

*******************************
Now if this is Introductory Accounting 101, how can associations lower their expenses without lowering the assessments, if the expenses are based on income to break even, doesn't that mean lowering the assessments?

I am suggesting that due to these extraordinary times, some associations may have to lower assessments because they can not provide the money for the budget items as normal. Do as you suggest, cut pool amenity, cut landscaping costs, etc. It is only a suggestion, nothing more and may work is specific cases in HOA's where the assessments are small per month. I am not sure this would give folks in trouble the relief they need to stay afloat.

Some modification of lowering the assessment rate in condos, given that the buget has to reflect expenses to break even if expenses are cut, it would appear you would have a harder time cutting expenses enough, thus lowering assessments, to save any of those in trouble.

On reflection and from experience it is going to be Accounting 101 be damned, each individual association that is going to have to deal with this and plenty that are dealing with this are going to have to do the best they can to maintain the association. Given this scenario, I suppose I am would have to widen my approval on the discretionary power of the Board, they may be forced to work outside Accounting 101.


Robert,

I can see that George's explanation was a bit confusing to you. He was trying to point out the need to budget for "bad debts". By inserting a bad debt line item of $1,000; theorectically it lowers the assessment income by that amount. However, the line item for income really remains the same at $50,000. If the assessments are not going to be increased to make up for the additional "expense" item of $1,000 for bad debts, perhaps other expenses may have to be lowered. Actually what it all boils down to is that another expense has come up -- bad debts. Best case scenario would be that there will be no bad debts and the assn will have an extra $1,000 at year's end. However, if there are bad debts (which is more probable in this economy) the board has taken proper steps to account for them.
MicheleD (Kentucky)
Posts: 4,491
Posted:
Dwight, I agree I got somewhat off track, though not completely, responding to Robert and clarifying a few things.

But I feel my bottom line comment still applies to the question asked:

It's not about being "human" or being a hard "a**."

The access to the pool should still be restricted to owners who are paid in full (or whatever threshold you apply) by the date of the pool opening. (or whatever date you generally have done so in the past).

This is not personal, and relaxing such conditions makes is personal. It's about being professional.

It's unfortunate that it's a little harder for people to meet the date, but, the fact is, this is not a life-supporting utility, like, say, heat in the winter. This is a "luxury" that a resident has access to if certain conditions and responsibilities are met.

Once they meet the threshold, let'em in. Prior to that, well, you pay to play.

RobertR1 (South Carolina)
Posts: 5,164
Posted:
Dwight, I suggest you go back and read your original post and also the words used in the title of this thread. I think it is apparent why folks here responded the way they did. I just want to remind you we don't do counseling, what we do is give opinions. You are absolutely free to either read our replies or not, no one will criticize you for that. You will also note that the above post contains much more information than your original post. Cut us a little slack here and don't be so personal about this whole business. I, for one, learned a little stuff from the postings to your question and I thank all for taking the time to respond.
MaryA1 (Arizona)
Posts: 7,043
Posted:
Quote:
Posted By MaryA1 on 01/07/2009 3:44 PM
Dwight,

Do your gov. docs. state the assessment must be paid yearly or is this a board decision to make? If the latter, perhaps changing to monthly payments might solve some of the delinquency problems. You state even a %50/mo payment plan would pose a hardship for some; but the $400/yr assessment is only $33.34/mo.

Dwight,

I thought I did reply to your concerns (see above); however, you didn't respond to my remarks. But, that's OK, it was just a suggestion. Albeit one that would make it easier for those having difficulties and possibly allow those who are now delinquent to get out of the delinquency stage and enjoy the pool when it opens.

I reading over your initial message, I get the impression your concern is whether or not those on a payment plan should have access to the pool. IMO, as long as a member is delinquent they do not have pool access, so if a member is on a payment plan that means he is not current on his assessments and doesn't have the right to pool privileges.
DwightT (Idaho)
Posts: 664
Posted:
Mary - didn't mean to ignore you, but originally I saw your suggestion as being more about the payments than about the pool access situation. In looking at it again though, I see that in general your idea could work. If we do monthly payments, then as long as people are current on those monthly payments they would still have access. And since those monthly payments would be less than the $50/month payments that some of the members have requested, it should be easier for them to stay current.

We haven't wanted to do monthly in the past because our expenses are not level throughout the year. During the fall and winter our expenses are very low, with most of our expenses coming in during the early summer. Looking only at the current year's income, if everyone was making monthly payments we wouldn't have enough cash available to pay some of the bills during the peak months.

However, since we have built up a cash surplus now, we could pay the bills from that surplus and then replenish it during the periods with lower expenses. That way we could keep our bills paid on time without creating such a large impact for our members.

Michelle - my 'human vs hard-a**' comment was looking at the two extremes. I was looking for something in the middle that would work, and Mary may have hit on it. I'll be suggesting that to the Board.

Thanks.
MicheleD (Kentucky)
Posts: 4,491
Posted:
De nada. . .

Mary often has good suggestions.
MaryA1 (Arizona)
Posts: 7,043
Posted:
Thx, Michele! :-)

Dwight,

When I was treasurer of my assn, I noticed that quite a few members paid their assessments in advance, many for the whole year (our were payable monthly). If it is up to the board to make the decision, it could be changed to monthly or quarterly. The board can inform the members that if they choose to continue paying yearly they are free to do so. I think you will find that if you change the payment procedure, in time you will have sufficient funds on hand to pay all the bills on time.
KirkW1 (Texas)
Posts: 1,665
Posted:
Dwight,

Some will say I am way off base, but here is my two cents worth:

I would setup payment plans for those who ask. The cost of the payment plan would amount to $80 over the period of the year. This works out to a nice $40 a month for the year.

Those on the payment plan would not be considered as being late in their payment and would have pool access. The kicker would be that on the 10th pool access would be revoked if that month's payment had not been made. I would also charge a $10 fee for each month that the payment was not there by the tenth. Since it is a monthly payment there would be a monthly fee.

The extra monies would should cover the extra expense of doing things this way. If you find it doesn't quite cut it, then raise the amount to $50 a month over the year.

While many here moan and groan about this not being charity, it is your neighbor you are dealing with. And in my not so humble opinion you should treat your neighbor well. There is a balance and it can often be found. If people pay the money, then where is the heartburn? To the objectors, you are simply charging $80 a year for the opportunity to pay 12 times instead of one. As a note, this amounts to a 20% increase in overall cost. That is about what insurance companies charge for making monthly payments instead of a single annual payment.
MaryA1 (Arizona)
Posts: 7,043
Posted:
Kirk,

You said: "I would setup payment plans for those who ask. The cost of the payment plan would amount to $80 over the period of the year. This works out to a nice $40 a month for the year."

Are you proposing to charge a member for setting up a payment plan?
JosephW (Michigan)
Posts: 882
Posted:
Dwight, not to throw a monkey wrench in the works (because I tend to agree with letting them swim if they're making their "make-up" payments on time), but how are you going to handle elections, voting in general and the "member in good standing" issue that's probably in your documents?

Joe
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RobertR1 (South Carolina)
Posts: 5,164
Posted:
Joe,
That opens up a can of worms Joe, but necessary.

Add can these folks serve on Board? Can they exert their responsibility as owners to enforce the covenants in that they are charged to protect all aspect of the association (condo). Example would be to call the authorities for enforcement of laws within the association..

I have a feeling it will continue as it does now and hope the issue never surfaces. Associations may be dictated by law in many matters, acknowledgement or compliance is seldom uniform.
JosephW (Michigan)
Posts: 882
Posted:
The reason I raised it was that documents generally say an association MAY prohibit use of amenities, or MAY turn off utilities, if an owner is in arrears, but the voting language usually is worded "SHALL be a member in good standing", which leaves no leeway.

Joe
Joseph West
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Community Associations Network, LLC
www.CommunityAssociations.net
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SheliaH (Indiana)
Posts: 6,964
Posted:
We've always said dues have to be current before anyone gets access to the pool, so if there's a delinquency of any kind, they don't get a pool pass. Since we have so many renters, the ban would extend to them as well, and we don't allow homeowners to loan their passes to delinquent people.

To keep track of who's current and to help control bad behavior, we've required homeowners to sign a form at the beginning of the pool season indicating that they've reviewed the pool rules and agree to comply with them - then we mail out the passes. We also have a pool monitor to check passes before anyone's admitted - if your unit isn't on the approved list, oh, well.

This may sound harsh, but as some of you pointed out, the pool's budget is based on everyone paying dues - when some don't pay, our pool vendor's fees won't change and we have to make adjustments.

As it happens, we have to bring the pool into compliance with the Baker Pool and Spa safety act before it opens, and we've already warned residents if the delinquencies don't come down, pool hours may be reduced or the season cancelled altogether.
If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
DwightT (Idaho)
Posts: 664
Posted:
Quote:
Posted By KirkW1 on 01/10/2009 5:36 PM
Dwight,
I would setup payment plans for those who ask. The cost of the payment plan would amount to $80 over the period of the year. This works out to a nice $40 a month for the year.

I think Kirk's idea generally has some merit. There will be some costs to the HOA for administering monthly payments vs a single annual payment. I would think that it would be reasonable to charge an administrative fee to recover these costs. We'll probably go with something like $5/payment though since that would be within the 18% rate that our docs allow for late fees. That way we would still encourage people to pay once at the beginning of the year (thus no admin fee), while still allowing people who have run into financial problems to make smaller payments that they can hopefully handle. We can set the due date as being the first of every month, and classify them as "late" if payment has not been received by the 10th. Since we use a computer controlled access system for our pool, we can automatically cut off access for anyone who is late.

Quote:
Posted By JosephW on 1/11/2009 12:19 PM

Dwight, not to throw a monkey wrench in the works (because I tend to agree with letting them swim if they're making their "make-up" payments on time), but how are you going to handle elections, voting in general and the "member in good standing" issue that's probably in your documents?

I think we're covered here. First, our docs state "The Association shall have the right to suspend any voting rights for any period during which any assessment against said Member's property remains unpaid". So we have the right to suspend voting rights, but not the mandate. Second, if we modify the policy (which the Board does have the authority to do) to allow monthly payments, then as long as they are current on those payments there isn't really a problem.

MaryA1 (Arizona)
Posts: 7,043
Posted:
Dwight,

Sorry, but if I were a member of your assn I would be asking, "what part of "delinquency" don't you understand." As long as a member is on a payment plan they are delinquent. Otherwise, they wouldn't be on a payment plan, right? If the member who is on a payment plan stays current on the plan, he is still delinquent as long as he owes some money to the HOA. If the board is going to view a member on a payment plan as not being delinquent, then how can they call any other member delinquent, who is late with a payment? IMO, this is a no-brainer.

Now with regard to Kirk's suggestion to charge a fee for the payment plan. IMO, this is not a good idea. If a member is having financial problems making payments, how are they going to afford a payment plan fee on top of late fees? This could turn into a "credit card" type of debt, where the payment is the same or just a bit more than the debt. BTW, what happened to the idea to change the yearly payment to monthly or quarterly payments? Frankly, I think that's the best option, if the board has the authority to make that determination. Actually, you might find there are fewer delinquencies if members can pay monthly instead of yearly.
KirkW1 (Texas)
Posts: 1,665
Posted:
Mary,

First, most creditors do not consider a person who is on an agreed on payment plan to be delinquent and don't report it as such. SO I don't agree that they are delinquent if they have not paid the full amount.

As for the administrative fee, while it may seem like adding fuel to the fire, many an owner would disagree with you. The issue is that for one reason or another they have failed to set aside the money needed for the dues and now you ask for a large payment. This is not nearly as uncommon as you might think. The hard evidence is to look at the sheer number of mortgages requiring an escrow account. And for those who have the power to stick to it, they are better off saving the money in their savings account. (This is also the reasoning for requiring income tax payments throughout the year.)

Also, the truth is that if you pay your car insurance monthly you are paying a hefty fee for the experience. But they hide the fee and instead give you a "cash discount" for paying up front.

Now if your documents allow for it, you could actually formalize the whole thing. You could set the dues to be a certain amount each month with a cash discount for those who pay the full amount ahead of time.

In an ideal world, you could perhaps offer a plan that will have them pay a little more this year and puts them ahead of the curve next year. You could tell people that if they pay $70 a month for the 12 months, they will have next year's dues paid up.

This all gets me to thinking that we really don't expect enough of software today for our associations. It is like we are the last holdout for sticking with paper statements only.
RobertR1 (South Carolina)
Posts: 5,164
Posted:
Kirk,
Some interesting observations here Kirk.

I can move our board about a discount for a years one time payment. No discount.

I also think we should be moving to all paperless, but this seems to unearth something in the Board that don't recogonize the advantrage of this. Some of it is seems to be sending things by mail insures their delivery. Strange, but it will come and the Board will save some $ and all we get refunds. Same as using Free Internet Companies for Board meeting conference call and now teleconferecing for a very small fee. All will get refunds there also because the budget will show positive fingers. Right!!!!!!!
MaryA1 (Arizona)
Posts: 7,043
Posted:
Quote:
Posted By KirkW1 on 01/13/2009 8:48 PM
Mary,

First, most creditors do not consider a person who is on an agreed on payment plan to be delinquent and don't report it as such. SO I don't agree that they are delinquent if they have not paid the full amount.

As for the administrative fee, while it may seem like adding fuel to the fire, many an owner would disagree with you. The issue is that for one reason or another they have failed to set aside the money needed for the dues and now you ask for a large payment. This is not nearly as uncommon as you might think. The hard evidence is to look at the sheer number of mortgages requiring an escrow account. And for those who have the power to stick to it, they are better off saving the money in their savings account. (This is also the reasoning for requiring income tax payments throughout the year.)

Also, the truth is that if you pay your car insurance monthly you are paying a hefty fee for the experience. But they hide the fee and instead give you a "cash discount" for paying up front.

Now if your documents allow for it, you could actually formalize the whole thing. You could set the dues to be a certain amount each month with a cash discount for those who pay the full amount ahead of time.

In an ideal world, you could perhaps offer a plan that will have them pay a little more this year and puts them ahead of the curve next year. You could tell people that if they pay $70 a month for the 12 months, they will have next year's dues paid up.

This all gets me to thinking that we really don't expect enough of software today for our associations. It is like we are the last holdout for sticking with paper statements only.

Kirk,

Well, my opinion is not the same as yours. IMO, if the dues are not current they are delinquent, plain and simple. But, of course, the BOD can make whatever determination they feel is right, I suppose.

I've been treasurer of an assn and I can't see the justification of charging a fee to put a member on a payment plan. The reason for offering the payment plan is to help them with a financial problem. By adding a fee only makes that burben greater, especially if it's a monthly fee. Equating it to the added fee on an is policy that is paid monthly is really not the same.

IMO, cash discounts should never be offered for those who pay their assessment in advance. This would be a direct violation of the gov. docs which state the assessments are to be equally assessed to each member. Also, any member is free to pay their assessments in advance w/o a payment plan being set up. This thread is about members who are having financial difficulties and might need a payment plan to help them pay off an assessment that is paid once a year, not monthly or quarterly.
MicheleD (Kentucky)
Posts: 4,491
Posted:
Kirk,

"Most" creditors may not consider those on a payment plan to be delinquent, but, by default then, that means some do.

Even so, I would challenge the qualifier "most." (friendly challenge, using french fries instead of light sabers)

I don't know how you would even go about verifying that.

I would say that some don't, and, frankly, that's their prerogative.

But our docs are quite clear, if there is an outstanding balance, the lot is delinquent.

We can agree to a payment plan, and we can work with them regarding late fees, but we can't consider them up-to-date in their assessments because, well, they're not.

So that would mean: No Voting. It would also mean no access to the pool or any other amenity that required them to be current in their assessments.

But then again, keep in mind, we are on an annual payment structure. We don't have monthly assessments.

If someone wanted to be on a monthly payment plan, as long as they were paying for the UPCOMING year and not the CURRENT year, we'd be okay.

Otherwise, no pool.

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