How to Deal With HOA Delinquency

Published: 11/01/2021

- by Alana Ashby

HOA boards have a fiduciary duty to ensure that assessments are levied and collected. In order to avoid serious financial issues related to assessment delinquencies is to stay proactive and have a formal collection policy.  

An effective collection policy should: 

  • - Be established by a formal resolution of the board that specifies the collection of delinquent fees, delineates the procedures that need to be followed, and designates the circumstances under which the procedures are required or permitted. 

  •  - Specific actions that are within the power of the HOA and its board. 

  •  - Set a firm due date for assessments. 

  •  - Outline the steps to be taken by the people responsible for collecting assessments when a payment is late with a specific timeline for each step of the process.  

  •  - Allow for discretion in special cases. The burden of requesting special consideration should be placed upon the owner. The discretionary power should be under the control of the board.  

  •  - Specify when a delinquent assessment should be referred to legal counsel. This step should be automatic once a delinquent assessment reaches a specific age or amount.  

  •  - Provide for the collection of any costs associated with collecting delinquent assessments.  

 

Once a collection policy is adopted, it must be distributed to every owner in the community. Following distribution, the collection policy must be uniformly enforced. Consistency is critical to effective enforcement, so the board must ensure that the policy is utilized and followed for every delinquent owner in the community.  

 

Being proactive in assessment collections also means pursuing any available legal remedies, including but not limited to: 

  •  - Seeking a personal judgment against the owner of the property in accordance with the statute of limitations 

  •  - Executing on a personal judgment by way of levy upon and sale of personal property, vehicle sale, and bank account or wage garnishment 

  •  - Filing a lien against the property 

  •  - Foreclosure of the property on a judgment or statutory lien 

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    Alana Ashby, CMCA and owner of AMI, helped to establish and served as a Board Member for Community Associations Institute (CAI) Idaho Chapter. Alana has extensive experience in all aspects of financial management, real estate development and management, as well as negotiation.  

     

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