Common HOA Board Member Mistakes > Delinquent Payments
In this series of posts, we’ve gone over the four common mistakes that HOAs make and how to avoid them. We’ve covered how to ensure your HOA’s financial health and how to properly file taxes, now it’s time to go over collecting dues. While some homeowners might be reluctant about paying fees, failing to collect them can put your HOA in financial danger. In this post, we’ll go into detail about how to collect payments, especially delinquent ones, to keep your HOA afloat. Next, protect your association with an LA HOA Insurance policy.
Seek legal counsel.
According to House Logic, consult your community association’s attorney and read for yourself what the bylaws say you can do about delinquent homeowners. Weigh the costs of the actions your board could take. Legal fees for letters demanding payment can run $200 to $500 per home, but each case is different. Suing a homeowner individually and trying to garnish wages to collect delinquent fees could cost $2,000 or more. Your community’s attorney may be able to recommend a collection agency with experience working on HOA cases.
Restrict access to amenities.
For delinquent HOA payments, you can restrict the amenities such as the pool or gym. In addition, you can also prevent delinquent homeowners from accessing common areas.
Offer payment plans.
If homeowners are really behind on their payments, you can offer them a monthly payment plan to pay down their balances. You can opt for 6 month or 12 month plan deadlines, whatever works best for both parties.
Put a lien on the home.
A lien is a court document that tells title companies the HOA has to be paid when the home is sold or the homeowner refinances his mortgage. A lien probably won’t generate a payment until owners sell their home or refinance their mortgages, says attorney Loura Sanchez in the Denver suburb of Arvada.
Require renters to pay for HOA dues.
If your homeowners are renting their homes out and are failing to make the HOA payments themselves, you can create a stipulation in their contract that requires the renter to pay the dues instead.
About Scott Litman Insurance Agency
At Scott Litman Insurance Agency, we are dedicated to protecting HOAs like yours. We have a unique understanding of the industry and the common risk exposures that you face in your daily operations. In fact, we find that 90% of the policies we review are missing coverages that violate the Covenants, Conditions, and Restrictions (CC&R), exposing the board, HOA and management to lawsuits – which is why our comprehensive policies are tailored to meet your specific needs at competitive prices. For more information about our products, contact our experts today at (818) 879-5980 ext. 201, or fill out our online form.