When dealing with delinquent accounts in your HOA, the most important thing you can do is encourage your homeowners to be proactive. The Board of Directors and your governing documents will dictate your specific process, but when you can help your HOA members avoid falling behind, the problem is much easier to manage.
Identify Delinquent Accounts
Our process is to start out by identifying the delinquent accounts at the end of every month. If it’s less than 30 days late, I send out a friendly email asking if they forgot their HOA bill this month. I invite them to call me or to mail in the payment. If 60 days go by and the account is late the next month, I send out another email and I also make a phone call and send the letter via the postal mail. Hopefully, someone will call me and explain they forgot or had trouble with their bank account or something that would explain why it was missed.
Proactive Collection Strategies
We always want to work things out. I am friendly to deal with in a collections sense. When HOA members call me ahead of time and tell me what’s going on, I know what to expect and how to help our accounting system to reimburse for a late fee if there is a hardship financially. Once that mail goes out, I put it on a reminder. The person has 10 days to contact me. If they don’t contact me by those 10 days, it’s time to send a stern letter that says the house has been identified as being in a pre-lien category. That means if the situation gets any worse or the HOA member refuses to contact us, then everything will be referred to our attorney.
Attorneys and Lien Notification
Once in the hands of an attorney, another letter is sent out and there are additional charges added to the account. As soon as an attorney is involved, it’s more expensive, so we want HOA members to deal directly with us. The attorney will send out the lien notification, which is notarized by a member of our Board of Directors. Then, the legal process starts of putting a lien on the delinquent house. No one wants to do this. With a lien, homeowners will have trouble getting loans or credit. And if the house is sold, the title company will be notified of the lien, which requires the HOA account to be paid prior to the sale closing.
The steps that are taken are dictated by the Board of Directors, and they will let us know how aggressive to be. They decide the process and it’s in the governing documents. The goal is to help people not get behind on their payments. It’s much better to be proactive.
If you need any help with HOA property management in Minneapolis, please contact us at 33rd Company.