When Owners Refuse To Pay Their HOA Fees

Question: One of our members is refusing to pay his annual dues. He has sent us NSF checks and simply does not seem to care. His property is unkempt and no longer lived in. What are our options?

Answer: You need a Collection Policy which complies with your governing documents and that details the specific collection steps that will be taken in the event of non-payment. Typically, those steps should start when a payment is no more than 30 days late. After several written notices, the matter should be turned over to an attorney who specializes in HOA collections. Attorneys can file liens against the property and get personal judgments against the creditor. But often, an attorney’s letter outlining the possible penalties is enough to prompt payment. There is a sample Collection Policy available at Regenesis.net.

Management Fee Formula

Question: How do management companies determine the fees charged to homeowner associations? Is there some standard rate or is it based on a percentage of revenue?

Answer: HOA management companies generally charge a base monthly fee which is expressed as a “charge per door” (the fee divided by the number of units). However, that charge varies a lot depending on the number of units and the scope of management work. The base fee takes care of routine tasks like managing the HOA’s money, responding to member requests, managing maintenance and contractors, attending regular meetings, etc. Non-routine tasks like writing a newsletter, transcribing meeting minutes, billing and collecting a special assessment, managing a renovation project and processing insurance claims often carry an additional charge which varies depending on who is executing the task (manager, bookkeeper or clerical).

Condominiums and other common wall communities usually pay substantially more for management than non-common wall communities that contain single family homes with very little common area. In the latter, bookkeeping is the primary task with relatively little if any time needed to maintain common areas.

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