The HOA account delinquency report is an essential part of the financial reporting arsenal. Unfortunately, not all association boards know how to prepare this important report.
What Is an HOA Account Delinquency Report?
A delinquency report is a statement showing all of the delinquent accounts in a given homeowners association.
Let’s face it — nobody is perfect, and there are bound to be a few or more owners who fail to pay their dues on time. This can happen for any number of reasons, including financial struggles or simple negligence. It is the duty of homeowners to pay their dues on time. Similarly, it is the duty of the HOA board to make sure dues are collected.
Understanding How Unpaid Dues Affect the HOA
Dues and assessments are the lifeblood of every homeowners association. Without them, an HOA community would suffer detrimental consequences.
Remember that homeowners associations have the primary goal of maintaining the community to preserve property values. Maintenance, of course, comes with a price. There are many expenses an association must pay for, including but not limited to landscaping, cleaning, insurance, repairs, and professional management.
When an association falls short of dues, it is unable to cover these budgeted expenses. Faced with such a conundrum, most association boards will either turn to cost-cutting or levy special assessments. Both of these options are unfavorable to owners.
First of all, cost-cutting can be dangerous when done drastically. If there are a lot of delinquent accounts, the HOA will be forced to remove some major expenses or significantly cut back on them. This jeopardizes the quality of service.
Special assessments, on the other hand, are unfair to a lot of homeowners. While most boards have the power to impose assessments, delinquent owners usually fail to pay these as well. It leaves the burden of covering the deficit on the paying owners’ shoulders.
The Importance of an HOA Account Delinquency Report
It is easy to grasp how outstanding dues can negatively impact any homeowners association. But, where does the HOA account delinquency report come in?
As you might make out from its name, this report is specifically designed to track and monitor the delinquent accounts in your HOA. It gives boards a way to quickly determine how much owners owe to the association. With this information, you can make the necessary budget adjustments and decide whether or not to levy special assessments to meet your shortfall. It also makes it easier to identify who has unpaid dues so you can refer them to a collection agency if need be.
What Is Included in an HOA Delinquency Report?
The HOA delinquency report is rather simple in its format, but it shows everything you need to know about the delinquent accounts in your community. While it may change from one association to another, this report generally consists of the following:
- Delinquent owner information (account number, lot or unit number, name, and address)
- Amount of unpaid dues, typically divided according to age:
- Current (unpaid dues below 30 days)
- Over 30 days
- Over 60 days
- Beyond 90 days
- Total unpaid dues per account
- Grand total of unpaid dues per age
The report is similar to the HOA accounts payable report in that it shows aged unpaid balances. But, unlike the AP report, the HOA account delinquency report shows debts owed to the association. It also differs from the accounts receivable report. The AR report shows all outstanding invoices, whereas the delinquency report only shows debts in the form of unpaid dues by homeowners.
How an HOA Management Software Can Help
A delinquency assessment report is relatively easy to prepare by hand. But, as debts age and as owners settle their balances, it can become increasingly difficult to keep the report updated. Whether you are preparing or updating an HOA account delinquency report, management software can assist you in many ways.
One of the most common mistakes you can make when preparing a delinquency report is missing information. When you have inaccurate numbers or names, you can misattribute the unpaid dues and cause a larger issue. You might end up erroneously erasing someone’s debt or inadvertently adding to it.
Considering accuracy is the foundation of all financial reports, a faulty delinquency report can throw your entire operation into chaos. It will take more time and effort to retrace the numbers.
Thankfully, with the help of software, you can ensure accurate details. After entering all the necessary information (such as the dues amount, the deadline, etc.), the report will basically prepare itself.
Time-wise, it is inefficient to prepare your delinquency report manually, especially if you maintain a hard copy (or a single soft copy) of the report. This means only one person can update the report or has to literally pass it on to another board member. Transferring information from one report to another can also be a hassle.
When you use software, though, the entire process is reduced to simple clicks. You can easily tag an account as delinquent or for referral to a collection agency (if you use one). You can also update the report faster since it is largely automated. Beyond that, you can generate the report instantaneously whenever you need to. This allows any board member to gain access to the report, provided they have clearance or enter the correct password.
While it is required for some associations to share the total delinquency amount to homeowners, a majority are not allowed to disclose detailed information. In Nevada, for instance, the law prohibits associations from disclosing private homeowner information.
California, on the other hand, does not explicitly forbid publishing the names of delinquent owners, though doing so can be viewed as a violation of privacy according to Civil Code Section 5215. While some release such information to shame owners into settling their dues, experts agree that it is best for the association to refrain from employing such a tactic as it can result in liability.
Manually maintaining a delinquency report is a problem because it may accidentally end up in the wrong hands. But, with software, you can exercise more control over access and report generation. You can also choose to keep the program offline so that you can only gain entry from a specific location.
Get the Best for Your Homeowners Association
An HOA account delinquency report is definitely an integral accounting tool that every association should use. Preparing and maintaining it, though, can come as a challenge without automated assistance.
This is where Condo Manager comes in. Make accounting and financial reporting easier using our comprehensive management software. We have programs designed for self-managed communities as well as large-scale companies. Give us a call today at (800) 626-1267 to learn more information or contact us online for a free demo.
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