Another New Year, Another Assessment

As the New Year tolls and the memories of the holiday season slowly fade into our collective rearview mirrors, Community Associations must focus on assessment collections -- the lifeblood of subdivisions -- that substance which allows the Association to maintain operations for the remainder of the year.

Since the new year typically marks the due date for most communities' assessment fees, I thought it pertinent to recount some problems inherent in assessment collections and the steps that an Association can take to mitigate these problems.

Action is the key. When an assessment remains unpaid, it's important that the Association take decisive measures to collect the fee. To avoid needless delays in the collections process, make sure that the Association has an effective procedure for gathering these delinquent assessments. An effective collections procedure will: include a written policy, address accounting error(s) if applicable, ensure that homeowner contact info is updated on a regular basis, and utilize a feedback system to determine why homeowners aren't paying.

Perhaps the most critical element of an Association's collection procedure is its timeline. Make sure that homeowners understand what they are expected to do and WHEN -- include due dates for payments, lateness penalties, or other additional fees and/or drafts that may become due as a consequence of non-payment. Be sure to spell out what legal actions will be taken at specific points in the collections process. Remember, more information is better. Keep the homeowner informed of these critical milestones so that they are incentivized to pay the assessments on time each year.

Finally, the Board must make sure that the collections process is applied consistently to all delinquent homeowners regardless of the situation. Homeowners will understand the severity of assessment delinquency only through the consistent enforcement of collection policies against all offending community members. It doesn't take long for an Association to garner the reputation for persistent or inconsistent collection efforts; the latter of which can actually lead to INCREASED late assessment payments by those homeowners who sense lax collection efforts on behalf of the Association. Consistent application of the collections policy will ensure that favoritism or bias is avoided, while allowing the Association to enjoy timely receipt of those funds which are absolutely necessary for its survival.