Often in life, things do not go to plan and people will fall behind in their financial obligations. Even the best-intentioned owner in an HOA or Condo can fall short and not be able to pay their maintenance fees.
Before the association goes full-throttle records a lien and files for foreclosure, it’s always a good idea to engage the delinquent owner and try to work out a payment plan.
It is always easy to talk about creating a payment plan, but when it comes to making the agreement, there are some important steps that need to be followed to prevent liability from the Fair Debt Collections Practices Act, state statutes, and obstacles that may be in your association’s governing documents.
1) It starts with an initial demand letter:
If the efforts of your manager or board of directors has not been successful with convincing delinquent owners to engage in a payment plan, then let a professional collection agency step in.
The first step is to notify the delinquent owner that they have 30 days to dispute the debt, pay the debt, or engage in a payment plan. At Axela Technologies when an initial demand letter is sent a delinquent owner can find their own login portal and resolve their debt or even make their own payment plan. They also have the ability to call the customer service department to discuss the delinquent assessments.
2) Work out the parameters that the board wants for a payment plan:
Before your collection agency can start working with your delinquent owners be sure that they know what the board wants in payment plans. Every association should have a uniform collection policy that outlines these details.
Some board of directors will only allow a payment plan to go for six months while others allow up to a year to pay. Do not to allow a payment plan to go too long into the future. A good time horizon for a payment plan is 12 months. More than 12 months reduces the likelihood of the payment plan ever being completed.
It is also very important that the payment plan contemplates future maintenance fees through to the end of the agreement. In other words, if you work out a 12-month payment plan, nothing should be owed after the 12 months of payments. The idea is to bring the amount owed to the association to ZERO.
3) Have it written down and signed.
Once the details have been worked out the delinquent owner should sign an agreement that details all the factors of the plan.
- Length of the payment plan (when it begins and when it ends).
- How much is to be paid every month.
- The day of the month when the payment is expected.
- Notice of what will transpire if the plan is defaulted upon.
- How will payments be made (check, debit card, credit card, recurring payments are always best).
4) Keep them advised:
It is always best to set up a recurring payment to automatically pay down the balance owed. If the delinquent owner is reluctant, then be sure that if they miss a payment a telephone call or email is made to remind them. If the owner completely defaults then the association has no other choice then continues its collections efforts.
These are hard times and it is common to hear people say “that we are all in this together.” Now is not the time to take a hard line on delinquent owners but rather work with them on making a plan to pay what they owe. Axela Technologies can work with your delinquent owners and put them on reasonable payment plans that will improve the association’s cash flow and help people get a handle on their family finances.
Click here to contact us for a no-obligation collections analysis for your community association.