What is it?

If you’ve come to one of our collections classes or read your Association’s Collection Policy, you may have heard the term acceleration. But what exactly is that? Accelerating means calling due all of the year’s assessments now. If it’s January and you accelerate assessments, all the monthly (or quarterly) assessments due this year are now due from the homeowner immediately.

Acceleration should be a clear line item on the ledger so there is no confusion about why there is a large charge. The homeowner will likely question a large vague charge on the ledger so a clear explanation is necessary. Also, if the collection action proceeds to Court, the judge needs to be able to understand the large entry on the ledger. As an example, if your assessments are $100.00 per month and you accelerate in January, your ledger may look like this:

January 2021 assessment                                                                 $100.00

February-December 2021 accelerated assessments                 $1,100.00

When to do it?

Not all Associations can accelerate assessments. In order to accelerate, your Association’s governing documents must allow for it. Sometimes the information regarding acceleration is in the Declaration, but more frequently, it is located in your Collection Policy. If you do not know if your Association’s governing documents allow for acceleration, contact one of our attorneys. Even if it does not currently provide for acceleration, we may be able to revise your Collection Policy to provide for it.

Assuming your governing documents allow for acceleration, now is the time to do it! Most associations allow for acceleration of the remaining calendar year’s assessments, either because the documents state this or because it follows the association’s fiscal year, which is often the same. Accelerating at the beginning of the year is most effective. If you wait until later in the year, you can still accelerate the rest of the year’s assessments, but accelerating at the beginning of the year has the biggest impact.

It is also most effective to accelerate just before sending a matter to the attorney for collections. Many associations accelerate during the turnover process. That way, the ledger provided to the attorney when the matter is opened already has the remaining year’s assessments accelerated. When an attorney requests the Court to enter judgment against a homeowner, the judgment equals the current balance due. So, if judgment is entered in February, only the assessments due through February are included in the judgment amount and any assessments that come due after that time are outside the judgment. If we garnish the homeowner for the judgment amount, the garnishment usually takes several months and the homeowner frequently assumes the post-judgment assessments are also included in the judgment. If we get judgment in February, but it takes until August to get the judgment paid, the March – August assessments remain unpaid. In that case, the judgment gets satisfied and the Court’s file is closed, but a balance remains due. We then contact the homeowner regarding that unpaid balance and they are often surprised that the garnishment didn’t pay those additional assessments.

However, if the assessments were accelerated, the full balance through the end of the year would have been included in the garnishment amount and the homeowner will be current at least through the end of the year.

Are there any downsides to accelerating?

We generally recommend all associations accelerate assessments before a homeowner is sent to the attorney for collection. There are a few instances when the Board might later agree to decelerate, such as in exchange for payment in full through the current month. Also, if the property is scheduled for a closing, the assessments need to be decelerated. The current owner would only be responsible for assessments through the closing date and any future assessments after the closing date would be paid by the new homeowner, so deceleration is appropriate.

It is also important for the Board to be consistent with acceleration and to treat all homeowners in a similar situation similarly. It is best to have a consistent policy for when to accelerate, such as always accelerating when a homeowner is sent to the attorney for collections. Alternatively, the Board could have a policy to always accelerate for repeat delinquencies. Having a written policy that provides for when acceleration happens, and consistently following that policy, will greatly reduce any potential selective enforcement claims.

If done consistently and at the right time, accelerating assessments can be a very useful method for reducing delinquencies in the Association. If you have any questions about accelerating, or need to have your documents revised to allow for acceleration, please contact one of our attorneys at 303-432-9999.

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