When a homeowner falls behind on their assessments, most community associations have procedures in place to address the delinquency. Whether that process involves engaging collections professionals or escalating to legal action, there are steps that must be taken.
Once this happens—when an attorney or collections expert has been engaged—the management company and/or board must not accept payments directly from the homeowner.
Accepting HOA Collections Payments Directly is Risky
At first glance, this may seem counterintuitive. After all, the ultimate goal is to recover the money owed to the community. If the homeowner shows up with a check or makes an online payment directly to the association, it can feel like a win.
However, accepting an HOA collections payment outside of the established collections process can create significant problems that may ultimately cost the community more time, money and potential liability.
It Complicates Communication
One of the biggest issues is the potential for confusion and miscommunication. Once an account is in collections, the homeowner is already being instructed to work directly with the collections company or attorney handling their file. If the association accepts an HOA collections payment directly, the homeowner may reasonably assume that their balance has been satisfied.
Meanwhile, the collections company or attorney may continue their efforts, unaware that payment(s) has been made. This can lead to a duplication of efforts, inconsistent accounting records and sometimes even accusations from the homeowner that they were misled or overcharged.
It Complicates the Process
Another concern is that accepting payments directly can undermine the legal process. If an attorney has already initiated legal action, every step of that action is carefully documented and governed by statute or court procedure. Direct payment to the association can complicate or even jeopardize the case. If this happens, the community may not only lose its ability to collect but may also be held liable for the homeowner’s attorney fees or the community’s own legal costs already incurred.
It Complicates the Numbers
There is also the issue of costs. Collections and legal actions involve additional expenses such as attorney fees, court filing fees or administrative costs which are recoverable from the homeowner if the process is handled correctly through the proper channels. If the association bypasses the process by accepting HOA collections payments directly, it may succeed in recovering the assessment but lose the ability to collect those additional collection or attorney costs. That shortfall can end up being absorbed by the community at large, essentially penalizing paying homeowners for their neighbor’s delinquency.
It Complicates Accountability
Boards and managers also need to consider the liability they take on when accepting payments outside the process. A homeowner could later claim that they were not informed of the true amount owed, that their payment was not applied correctly or that they were treated unfairly compared to others.
In some cases, this could escalate to a lawsuit against the association, creating additional exposure and cost. By keeping all payments within the established collections or legal framework, the association protects itself from these disputes while ensuring the process remains consistent and defensible.
Trust the Process
The bottom line is that consistency is critical. Homeowners need to see that delinquencies are handled fairly, uniformly, and in accordance with established procedures. When everyone is required to resolve their delinquency through the established collections process, it eliminates perceptions of favoritism or special treatment and helps the association maintain its credibility. More importantly, it ensures that the process results in a clear resolution that benefits the community.
The best practice is simple. Once an account is in collections or with legal counsel, direct the homeowner to work exclusively with that party. By maintaining a unified and consistent approach, associations can protect themselves legally, preserve their right to recover all costs and fees, and avoid costly liability. In the long run, refusing direct payments during collections or legal action is not only the right motive, it is the one that best safeguards the financial health and integrity of the community.
Rely on the Experts
Accepting HOA collections payments directly can spell out trouble in your community. If you’re unsure about how to handle your community collections, contact us today. Axela’s team of experts is happy to share what we’ve learned from years in the HOA/Condo collections industry and to help point you in the right direction.
