How Much Should Your Community Pay for HOA Collections?

When an HOA or condo association experiences delinquency, they end up on a path where there aren’t a lot of options available. Not only are recovery choices limited – placing a lien on the property is just about the only recourse – but so are the kinds of professionals who can help in your recovery efforts. And of those options, most are going to have no problem charging through the nose for their services. This makes knowing how much you should pay for HOA collections difficult.

But we believe your community shouldn’t lose ANY money when it comes to collecting from delinquent homeowners.

Start From the Top

We’ve said (many times) before that HOA and condo dues are the lifeblood of a community. The money coming in from community members helps ensure that things run smoothly–that vendors like landscapers and maintenance team members get paid, that repairs are handled, and that the community is kept up and running at all times. This is why it’s crucial that every community association should have a uniform collections policy in place. 

This policy should detail the finer points of your community’s delinquent dues-collection process. It’s basically a set of guidelines that tell residents not only how delinquencies will be treated, but what they can expect in terms of late fees and interest charges for unpaid dues. It’s a way to keep everyone on the same page not only about the importance of the dues to the community but the seriousness of what happens when they go unpaid. 

This HOA collections policy is the number one reason why no community should lose money when trying to recover unpaid dues from delinquent homeowners.

Don’t Fall Into the Trap of Foreclosure

Your community’s uniform collections policy is the exact set of steps needed to reasonably start the collections process. Every scheduled late fee or interest charge is designed to incentivize the delinquent homeowner into paying back some, if not all, of the monies owed to the community. No one wants to watch their debt grow into something completely unmanageable, and actions like warning letters and fines are simple and free options to accomplish that goal. 

But many associations believe that their best bet for recovery is to initiate foreclosure on the property. That’s completely wrong, even if your lawyer tries to tell you otherwise! Choosing to foreclose is like bringing a flamethrower to a fistfight–it might get you back some of the money your community is owed, but that’s a big “might” and it will cost you an arm and a leg in legal fees to get that measly win. And in the end, one of your neighbors is forced out of their home. Foreclosure is a terrible, desperate move that should only be used as the absolute last resort

An HOA Collections Solution That Doesn’t Cut Into Your Principal

While your HOA collections policy should be the kick in the pants most homeowners need to pay back their debts, there are some situations where it just won’t happen. Maybe the money isn’t there, or maybe there’s more going on under the surface, but whatever the reason, that isn’t your HOA or condo association’s cue to start throwing more money at the problem. 

Axela Technologies offers communities a way to recover their losses without losing out on any of the monies owed. Instead of taking fees from the unpaid HOA assessments, Axela takes our payment from the late fees and interest charges defined in the governing documents. That means even if your community chooses to use professionals to move the collections process along, you won’t lose out on any of the principal – that money your community is relying on getting. 

Struggling to recover delinquent HOA or condo fees from your homeowners? Contact Axela today for your no-cost, no-risk consultation to get the collections process going. And if your community doesn’t have a uniform collections policy in place, it’s not too late to incorporate one into your community documents–our free sample uniform collections policy is a great place to start.

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