Dealing with delinquent homeowners is an unfortunate reality for the majority of HOA boards. With tight budgets, payment defaults can be costly. Collecting delinquent HOA fees is one of the most common problems faced by community associations, which is why many turn to professional property management companies. Here is a list of tips devised to keep your association solvent even when your members aren’t.
- Stay on top of it. With late payments creating consequences like community lending restrictions from the federal government, it is important that swift action is taken.
- Consider taking away recreational privileges. For properties that have a shared common area or amenities such as a pool or gym, suspending privileges until payment is an effective way to incentivize compliance. “We’ve seen payments begin within three to seven days after privileges are terminated,” says Los Angeles attorney Sandra Gottlieb.
- Offer a payment plan. For tenants that are under financial distress, a payment plan is a realistic way for them to meet their financial obligations. Financing plans are typically 6 or 12 months in length.
- Understand how assessment liens work. According to the Florida Statutes, Real and Personal Property, US.3085 (U.S. 2014), “To be valid, a claim of lien must state the description of the parcel, the name of the record owner, the name and address of the association, the assessment amount due, and the due date. The claim of lien secures all unpaid assessments that are due and that may accrue subsequent to the recording of the claim of lien and before entry of a certificate of title, as well as interest, late charges, and reasonable costs and attorney fees incurred by the association incident to the collection process. The person making payment is entitled to a satisfaction of the lien upon payment in full.”
- Keep the HOA’s Contact Information Available. Make sure that owners, realtors, and title companies can easily find the HOA to talk with to get pay off numbers when a property is transferred.
- File a Notice of your lien. If the lien fairly large, you may want to consider filing a notice of the lien with the county records office.
- Understand how lien priority works in foreclosure. If you have a delinquent property in foreclosure, it may be best to consult with your attorney on how best to proceed. According to HOA Attorney Amanda Bloomgren, “If it is the first lien that is being foreclosed, the HOA will lose its lien rights up to the date of the sheriff’s sale unless the HOA chooses to redeem it. However, if a second mortgage is foreclosed, the HOA will retain its full lien.”
- Using Court Action. When all other attempts fail, a court action against the property owner is a conclusive way to settle disputes. Liens are not only held on real estate, they are also personal obligations of the owner, so despite foreclosure, the personal obligation to pay remains.