What Can Your HOA Do When A Homeowner Fails to Pay Their Dues?
As an HOA board member, you are probably aware that some homeowners fail to pay their dues on time, while some fail to pay their dues at all. As a member of the board, you must ensure that all dues are collected, because it is your job to keep your community running. This article explains why Homeowners Association dues must be collected, and how you can address homeowners who fail to pay their fees on time.
Why Your HOA Needs to Collect Dues
Almost every planned community is run by an HOA. Its obligations are outlined in the governing documents for the development (such as Articles of Incorporation, Bylaws, and a Declaration of Covenants, Conditions, Restrictions, and Easements (CC&R’s). The HOA’s main obligations are to maintain and repair the common areas and keep the association financially stable.
How Much Should Your HOA’s Dues Be?
Many homeowners get upset when their fees are high, especially when they don’t understand where the money goes. To establish how much your HOA fees should be, you need to find out how much money you need to collect based on its annual budget. These costs might include such things as landscaping services for common parks, capital improvement projects, and utility costs.
Typically, the HOA divides dues equally between all homeowners in development, but in some developments, dues are allocated based on the relative size of owners’ properties. This is more common in condominium developments than their single-family counterparts. For example, the owner of a 5,000 square foot unit might pay a higher proportionate fee than the owner of a 500 square foot unit in the same building.
What If the HOA Cannot Collect Enough Dues?
Sometimes, the association cannot collect all the dues needed to meet the budget because of late-paying or nonpaying homeowners. To keep the condition of common areas from declining, the HOA can raise the number of periodic dues. Another option is to levy a special assessment for each homeowner. Because your association has the right to raise dues and collect assessments, it will rarely ever go bankrupt, but only raise dues or levy a special assessment if you have to.
What Can HOA Board Members Do If a Homeowner Fails to Pay Dues?
If homeowners in your community fail to pay their dues, you must know how to follow-up with them. It is important to familiarize yourself with the rules of your homeowners association so that you know what powers you have. The steps that you are allowed to take to get a delinquent homeowner to pay depends upon the terms of the HOA’s governing documents. Board members might have the right to assess fees for delinquent dues, file a lawsuit against the non-paying owners, put a lien on the delinquent owner’s property, or even foreclose on the owner’s property to collect the lien amount.
If your HOA’s governing documents do not give board members the right to do anything about delinquent owners, you might feel powerless. In this case, you might want to consider amending the governing documents to grant the board members more power to go after delinquent homeowners. For example, you can amend the CC&R’s to give the HOA the right to assess fees for delinquencies, to sue delinquent homeowners, or to file liens for delinquent dues.
The downside is that changing the HOA’s governing documents is not an easy process. It will be time-consuming and expensive, with no guarantee of bringing the desired results. You may want to consult an attorney or professional management company if you have questions about amending your association’s governing documents.
Does Your HOA Need Help in Collecting Delinquent HOA Dues?
If your community needs help collecting delinquent HOA dues, Condo Manager is ready to assist you. We offer the highest-quality association management solutions, such as collections, accounting, financial management, violations enforcement, communications, and more. Our services are remote, meaning we use cutting-edge technology to manage HOA and condo associations across the country. If you are looking for remote management solutions for your association, give Condo Manager a call at (800) 626-1267 or contact us online.