I have been in this business for many years and while I have heard many agree with me or others on how to rein in delinquencies I also know this is a hotly debated topic. One of our associations refuses to charge any form of late fee and to give them their due they don’t have a ton of delinquencies. However that is not my advice. My advice is simple; be mean and miserable, tough and unrelenting and digress only where there is a well documented reason to be generous and forgiving. My experience in dealing with rentals is we tell them how tough we are going to be, if we have to chase them. If they have a problem and call us before we call them, life will be much easier. We have very, very few delinquencies and only an occasional tenant who pays after the third day.
The first thing that is needed after a reasonable set of CC & R’s that set out the broad aims of the association, to collect on time, is a well written collection policy. In fact if there is not a collection policy in writing good luck going all the way to collect from that delinquent homeowner. My suggestion. 15 days and the dues are late. 30 days and they gather interest at 12%. 60 days and they get a pre-lien letter and 90 days and they are liened at the cost of the homeowner. There are some other provisions that must exist such as examining the record, and holding a hearing or a dispute resolution procedure, but the essence is simple, chase hard and fast. Now that does not mean being inhuman. When an association learns of a tragedy within a family steps should be immediately taken to offer assistance, sympathy, education and perhaps a delay in the imposition of any late fees. It is much easier however to delay the imposition of a penalty for 30 or 60 days than to try and collect when the association’s policy is to do little or nothing for 6 months. For instance if the policy is a pre-lien letter after 60 days a 30 day delay because of hardship or bereavement is perfectly reasonable.
Our company offers collection services whereby we track and pursue delinquencies on behalf of the association. There are also a number of attorney firms some of whom specialize in collection and there are collection agencies that do nothing else.
The filing of a lien early is very important. Many properties are being sold as short sales with the original lending agencies agreeing not to be repaid in full. This does not mean that the association may not seek full repayment. Small claims actions can also produce favorable results.
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