One of the more surprising questions asked by home and unit owners in condominiums and HOAs is who collects their condo and HOA fees and assessments and where that money goes. Clearly, there are expenses that are paid for by their association but many owners think the association has a magical supply of money that is in place to simply write checks and pay for expenses as they come up. The Reserve Fund is an even more mystical money supply that is drawn upon whenever a major capital improvement, such as a new roof, is needed. I can assure you that there is no “fountain of money” funding these vital supplies of money. Further, most associations struggle with having enough money on hand to keep up with the unending demand to provide personnel and services needed to properly run a modern condominium or HOA.
Who Collects Condo and HOA Fees and Assessments?
Governing documents spell out the formula for determining the amount of HOA Fees and Assessments that are assigned to each and every home or unit owner. It could be a flat fee, based on a percentage of unit ownership (condominiums), or it could be some other formula put in place when the property was declared a condominium or HOA. The fees and assessments are payable to the governing body, typically a non-profit corporation known as the Association.
The Association has the power to grant agency to a third party such as an association management firm or similar. All home or unit owners are notified of the agent and are required to make their payments to that third party. The third party is the custodian of those funds and doles them out at the request of the Board. Since the dollar amounts in the custody of this third party can be quite substantial, it is imperative that the Board place as many safeguards as possible to protect the assets of the association, in this case, money. Fraud and embezzlement are one of the Association’s greatest risks.
What Happens to the Money?
Since most Associations are non-profit corporations, the money collected from home and unit owners’ fees and assessments are used to pay for the current and future expenses of the Association. Everything from trash removal to insurance premiums to payroll to lawn and grounds maintenance gets paid for from Association members’ HOA fees and assessments. Future expenses, too, are funded through contributions to the Reserve Fund, an interest-bearing account set aside for expected future expenses. The concept is that tomorrow’s expenses are funded with today’s contributions.
What Happens When Home and Unit Owners Don’t Pay?
There are occasions when the Association faces a challenge from home or unit owners that either can’t pay or are unwilling to pay their fees and assessments. This creates a hardship for the Association as every penny of the budget is funded from the expected payment of common fees and assessments from condominium associations and HOA members. The governing documents clearly spell out what is expected of both the Association and the Member. When either default on their responsibility, a series of events is triggered. State law also comes into play when home and unit owners don’t pay their fees and assessments. While some associations choose to involve an attorney in the matter, there is truly no need to do so as the correct response is to employ a no-cost, no-risk collection solution. Axela Technologies is a licensed and insured debt collect agency specializing in recovering the Association’s funds through the pursuit of the delinquent debtor. 100% of the Association’s funds are recovered and the budget remains intact as no additional funds were spent in pursuit of debt collection.
If you are concerned about delinquency in your community, refer your Axela to your board. Suggest that they get in touch today and learn how Axela Technologies can help. Axela Technologies handles all collections on a merit-based system. Visit our website at https://www.axela-tech.com today and ask to speak to one of our condo and HOA delinquency collections experts.