There are certain things in life we do at certain times of year: New Year’s resolutions, flu shots in the fall; holiday shopping in the winter. Did you know there are certain to dos that should occur at particular times when handling delinquencies? Add these to your annual calendar each year to be sure you are maximizing collections and minimizing delinquencies:
January/February: Accelerate assessments
Early in the year is a great time to consider accelerating assessments. If a homeowner has a past due balance, the Board may be able to call due the rest of the year’s assessments. The ledger then shows a line item for the rest of the year’s assessments. Then, if the homeowner is sent to collections and the balance due is paid in full, the homeowner will have the full year of assessments paid. This prevents the problem of a homeowner paying the balance due to remove themselves from collections, but then immediately falls delinquent again when the next monthly assessment comes due.
Two notes about acceleration: First, be sure the association’s governing documents allow for acceleration. It can only be done if allowed by the association’s governing documents. Second, some governing documents specify that acceleration is for the remainder of the fiscal year, not the calendar year. So, if the association’s fiscal year is different from the calendar year, acceleration is more useful at a different time of year.
Spring Cleaning:
Many boards take a bit of a break during the holiday season then get back to association business more seriously in the late winter and early spring. That’s a great time to do a review of delinquencies and “clean out” some of the smaller balances that might not make sense to send to collections. For example, if you have a balance that is only due to a late fee and the homeowner has paid all assessments, but the balance is accruing because of that late fee, this would be a good candidate to consider waiving the balance. Some boards also annually waive any balance under $20 or $25 just to clean up the books a bit.
June/July/August: Enforce amenity access
Many governing documents allow an association to deny a homeowner access to certain amenities if they are delinquent in paying assessments. Over the summer, many homeowners want access to the community pool. So, if the association’s governing documents allow for a homeowner to be denied access to the pool for having a balance due, the Board can enforce this provision. Every summer, we get calls from homeowners in collections that want to pay their balance just so they can access the pool. This can be a very effective way to encourage homeowners to bring their balance current.
End of the year/Budget Season: Remind homeowners of payment options
When sending out annual assessment information to homeowners, this is a great time to also remind homeowners of all the options they have to pay their assessments. If your assessments can be paid via ACH or a portal, include that information in the materials sent to the homeowners. Even if ACH or a portal isn’t available, homeowners still can set up automatic payments through their bank, which will send a payment to the association every month without the homeowner having to consciously make the payment regularly. Providing all these payment options to homeowners, and reminding them of them frequently, can help minimize delinquencies before they happen.
By adding these regular to dos to your annual calendar, you can help minimize delinquencies and maximize collection efforts for your association. If you have any questions or concerns about collections options or best practices, please feel free to contact any of our Altitude attorneys at 303-432-9999 or [email protected].