Questions To Ask Before Hiring An HOA Collection Agency
There are a lot of benefits to hiring an HOA collection agency. Here is a comprehensive guide outlining the key questions you should ask when considering an HOA collection agency, along with explanations of why these questions are important. You can also read more here about how to choose an HOA collection agency.
Questions To Ask Before Hiring An HOA Collection Agency
- How Much Experience Does Your Agency Have With HOAs?
Experience is the most important factor in choosing an HOA collection agency. Agencies that have experience with homeowners associations know how to balance collecting dues with adherence to the governing documents, state and federal laws, and keeping harmony in the community.
It can also be expected that an experienced agency will be able to show results from the HOA collection industry, having an understanding of state-specific and federal regulations and knowing how to handle delicate situations with respect, construction, and effectiveness in interactions with members.
- Are you licensed and insured?
Before hiring any agency, ensure it is licensed to operate in your state and adequately insured. Licensing entails meeting the state requirement for operation, while insurance covers your HOA and the agency should any liabilities arise in the course of collection.
- What collection methods are employed?
Understand the agency’s approach to collecting unpaid dues. Their methods must align with all laws and regulations, avoid aggressive tactics, and maintain a peaceful and harmonious relationship with homeowners.
Ask how they communicate with the homeowners, what the tone of letters is, and what steps they use for escalation. Agencies using effective, respectful methods assure quality collections without unnecessary friction or backlash.
- How Do You Handle Communications with Delinquent Members?
Transparency and respect are the hallmarks of the communication method for the HOA collection processes. Ask how the agency communicates with the delinquent member:
- Do they send a series of notices?
- Do they make follow-up calls?
- How often do they get in touch with the members?
- Do they ramp up urgency over time?
This means the agency has to be polite and professional to urge the members to pay their dues, especially within a small, close-knit community.
- What Are Your Fees and Costs?
Another important thing regarding an HOA collection agency is the fee structure. Some agencies will charge a flat fee for their services, while others may take a percentage of collected dues. Flat fees are generally preferable due to the predictability and assurance that a majority of the recovered funds will actually go to the HOA. Avoid companies that do not provide upfront fee disclosure or that have hidden charges.
- Do you have payment plans?
It is very important that the board retain control of the method by which accounts and members are treated. Work only with an agency that can allow the board to provide the payment plans and ensures the payments are made directly to the HOA or its agent. This keeps the board in control and keeps the treatment of the members in concert with the board’s goals.
- Do You Report Delinquencies to Credit Bureaus?
Credit reporting is a great incentive for owners in arrears to pay their assessments. Inquire if the agency reports to all three major credit bureaus – Equifax, Experian, and TransUnion – and how they do so.
Be wary of agencies that require reporting as a trade line, which puts a burden on the board to report all community members monthly, whether they have paid or not.
- Do You Have References?
A good agency would have references from associations they have dealt with in the past. Communicating with those references will provide valuable insight into the agency’s professionalism, success rate, and style of communication. Ask for their satisfaction, how soon accounts were resolved, and whether the agency has kept respectful relationships with members.
- How do you ensure compliance with the law?
Ask about their compliance with the FDCPA and any other regulations. Ask them how they ensure they follow all rules and how they stay compliant.
- What kind of technologies do you use?
Technology enhances collection effectiveness. Ask what kind of software and tools are utilized in the agency in respect to communication, records, and reporting. The need is for a very secure system that protects member data and offers real-time access to account information.
- How do you handle funds collected?
Explain how funds collected are handled and forwarded to the HOA. It is always better for homeowners to pay the association directly to avoid any confusion and delay in the transfer of funds. Those agencies that collect payments on behalf of the HOA should show proper documentation and make timely transfers.
- What if a Debt is Not Paid?
With any given agency, some debts go uncollected. Ask about their processes for escalation and any further steps they advise. Knowing the options will prepare your HOA for whatever might happen.
- How do you protect homeowners’ data?
Ensuring the protection of sensitive member data is very important. Inquire about the security measures the agency takes to protect the data, such as encryption, controlled access, and compliance with the data protection laws.
- What success rate?
Ask for the agency’s success rate, how long they have maintained that, and on which states it is based. A high success rate translates to effectiveness and reliability. You will also want to ask how long it takes to get money back on average in their resolve of delinquent accounts.
- How Do You Handle Complaints?
A professional agency would have clear processes for dealing with complaints, both from members and board members, to ensure fairness and consistency in the handling of issues.
Final Thoughts
The right HOA collection agency can make a huge difference in your association’s finances and the respect that members have for the board. With these questions, your board will be able to make an informed decision now that will serve your community well for years to come. The right agency will effectively collect dues in arrears while maintaining professionalism and respect throughout the process, reflecting positively on your HOA board.