Just like any organization, homeowners associations are no stranger to bad debt. When homeowners fail to pay their dues on time, it results in delinquencies. But, did you know that management software can help you with HOA delinquent accounts?
What an Increase in HOA Delinquent Accounts Means for Your Community
A homeowners association is responsible for maintaining a community. It does this by providing services and amenities as well as enforcing covenants and rules. But, the money used to fund these things must come from somewhere. And, for HOAs, it comes from the homeowners themselves.
Associations regularly collect dues from members and use the money to maintain the neighborhood. The HOA board, comprised of volunteer members elected into their positions, is in charge of determining the dollar amount of these dues by preparing a budget and anticipating the upcoming year’s expenses. And, ideally, all homeowners would pay their dues on time and in full. Unfortunately, that is not the case with all associations. In fact, many HOAs have delinquent accounts.
But, what does it mean when an association experiences an increase in delinquent HOA dues? It can’t really be that bad, can it?
Since HOA dues are an association’s primary source of income, if you take that away, then the HOA won’t have enough money to pay for operating expenses. The HOA won’t be able to maintain the community properly, which can lead to decreased curb appeal and plummeting property values. In the end, it is the homeowners who will suffer.
The HOA board might try to recoup this loss using other means just to cover expenses. More often than not, this either involves raising dues the following year or charging special assessments. Neither of these options will go over well with homeowners. If the governing documents permit, an association may even take out a loan to pay for more urgent costs. But, loans bear interest, and the association will still need to take money from dues or special assessments just to pay off the loan.
How an HOA Management Software Can Help
All things considered, HOA delinquent accounts are never a good thing. They can signal something much direr, economy-wise, and can transfer most of the burden to paying homeowners. While it is clear that HOA delinquency is something all associations must steer away from, this is often easier said than done.
As a member of your HOA board, it is only normal to rack your brain trying to think of ways to prevent or remedy HOA delinquent accounts. Believe it or not, though, an HOA management software can help you with this problem. Here are four ways an HOA management software can address delinquencies in your community.
1. Send Out Automatic Notices and Reminders
Homeowners are busy. Between 9-to-5 jobs and their personal lives, they don’t always remember to pay their dues on time.
While you can argue that it is their responsibility to schedule it in their calendars, as a board member, it is your job to nudge them in the right direction. The problem is, sometimes you forget to send notices, too.
With an HOA management software, this problem practically solves itself. Most management programs allow you to send automated notices and reminders to your membership. All you need to do is plug in the details and set the schedule. Then, let the software do everything for you. Not only does this lighten your workload, but it also minimizes delinquencies because homeowners don’t forget about the deadline.
2. Convenient Payment Methods
It is one thing to remind members to pay their dues on time, but you also have to make it easy for them to do so. Many associations still use the traditional method of asking owners to mail their checks in. This approach, though, is often time-consuming and inconvenient for owners.
An HOA management system can step in and make the payment and collection process much more streamlined. Instead of mailing checks to the association, homeowners can simply pay their dues online. An HOA management software usually comes equipped with various online payment methods, including but not limited to credit cards, debit cards, ACH, and eChecks. When you make it easy for members to settle their dues, you can expect lower delinquency rates.
3. Track Delinquencies
How are you supposed to know how your HOA delinquent accounts are doing if you don’t track them? Sure, you can do it the old-fashioned way by recording them using pen and paper. You can even use a spreadsheet to do this. But, every time an owner settles their delinquent dues, you have to manually update your file.
Many management software offers easy delinquent HOA account tracking. This lets you check how many homeowners are delinquent, how much they owe, and how long they have had outstanding dues. Additionally, you can deduct their payments directly from their delinquencies, eliminating the need for you to deduct it yourself and manually updating your records.
4. Easy Escalation
Although the penalties for delinquent dues can vary from association to association, it usually follows a general process that starts with sending a demand letter along with a fine. If a delinquent homeowner still fails or refuses to settle their unpaid dues after that, the association can set up a payment plan. Some states, like Colorado, even require them. The usual next steps in the escalation process are as follows: Suspend member privileges, refer to a collection agency, file a lawsuit, place a lien, and foreclose.
If your association has a lot of HOA delinquent accounts, it can be difficult to know exactly where in the escalation map each one falls under. If you jump a few steps outlined within your governing documents, you may even find yourself in legal trouble. To avoid this and remain consistent with your policies, use HOA management software. This type of software allows for seamless escalation. Some even come with collection agency integration, making for easy referral and tracking.
The Benefits Are Apparent
Clearly, HOA delinquent accounts put homeowners associations at a disadvantage. They have a negative effect on your bottom line and can force your board to make unpopular decisions such as raise dues or levy special assessments.
More importantly, they are unfair to homeowners who do pay their dues on time. If you want to reduce delinquencies in your community, or at least have some control over them, then it is time to invest in HOA management software.
Self-managed communities can highly benefit from HOA management software, but looking for the perfect one is not always easy. Luckily, Condo Manager comes with all the features you will ever need. Call us today at 800-626-1267 or contact us online for a free demo.
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