HOA Collections for Management Companies

If you’re a homeowners associations manager, you know how delinquent HOA dues can quickly become one of your biggest headaches. And, who do board members stare at for answers…you. The strain delinquencies put on your community associations not only impacts your boards’ ability to handle maintenance and keep reserves accounts funded, it also damages the respect their community members have for the board.

But did you know the solution can actually become a revenue stream for HOA management companies?

New Management Company Revenue Source

Whether you’re dealing with HOA dues, condo collections, or property owners association assessments, a simple solution exists. It’s effective, neighborly, and affordable. It’s so affordable, management companies add-on an administration or maintenance fee, and generate a new revenue stream. More on this shortly.

Traditional Methods Are Past Their Prime

HOA collections have long been a thorn in the side of managers and board members. In the past, unpaid assessments caused a knee-jerk reaction, with boards running to an attorney, and the lien and foreclosure treadmill. But these old methods have only proven to drain an HOA’s reserves, be painfully slow, and yield minimal results. They’re also the root of a considerable amount of discord among community residents.

And foreclosures hurt everyone in a community – non-paying and paying members alike. HOA boards are understandably queasy about declaring legal and financial war on neighbors over delinquent dues. And managers are getting wise to the blowback they get from the scars such tactics leave on communities.

“No Cost” Agencies Sound Great, Until…

Too many boards have found out the hard way how painful and litigious the “free lunch” offered by no cost HOA collection agencies can be. Granted, it sounds ideal… until you discover how those agencies operate, and what happens to people in their wake. Many of the complaints and law suits filed against no cost agencies are done by a homeowner who gets buried in exorbitant fees. Even board members have filed formal complaints with government agencies over how they feel they were misled by such firms.

But that’s not the worst part, because these agencies are also charged with using predatory harassment tactics in violation of state laws and the Federal Fair Debt Collection Practices Act (FDCPA). There are plenty of examples online of abuse when a no cost agency collects delinquent assessments. Many involve burying homeowners in egregious fees and usurious interest.

The result? Instead of resolving problems, you end up causing new ones: angry, harassed homeowner, who feel victimized, blames their board for hiring this agency. And, the board starts looking sideways at you for bringing this ‘solution’ upon them.

With the BBB and CFPB logging so many grievances from homeowners abused by these heavy-handed debt collectors, is it any surprise legal quagmires follow? And, consumer protection attorneys being what they are, sue everybody involved – and let the courts sort the mess out.

A Neighborly, Effective HOA Collections Option

Peace in a community is priceless. And you can have it – and make your boards happy – while still collecting delinquent dues. The heart behind this method is to utilize the same method Macy’s, Lexus, and US Bank use to motivate proper payment without making enemies. Credit reporting is one key. But you have to use it the right way in order to be effective. As it turns out, ensuring communications hit home with delinquent members is another important aspect. And having HOA board members set account payment plan guidelines gives boards control over the process; which they find highly desirable. 

A Simple And Powerful Process For Management Companies

Having a partner with decades of community association assessment collection experience, one that brings a novel approach that flows with homeowners’ human nature, is paramount. Here are some factors that influence a successful collection process you may not have considered before:

• Utilizing Skip Tracing to make sure all communications get each homeowner’s attention..
• Exercising All Avenues of communication, because everyone has one distinct form of contact they’ll respond to most.
• Instructing Homeowners to pay you the property management firm, or their board, directly. A homeowner feels more comfortable paying their own community than an outside party, which means fewer complaints and a smoother process..
• Introducing The Most time-tested, personal motivation in the financial world – credit reporting – to motivate homeowners; thus bringing their HOA dues on par with all their other credit-reportable responsibilities.
• Composing All Aspects together in a cohesive timeline – one that delivers proven results.

Tack on having your boards set terms for payment plans, and giving them crystal clear transparent access to supervise every action taken with each homeowner – even down to seeing our internal notes from conversations with their members – and you have a solid solution that makes you a hero with your boards.

Credit Reporting Gets Attention – And Payments

People may ignore an HOA bill, but they care deeply about their personal credit. Credit scores affect everything today, from loan interest rates to employability, so impending credit reporting acts as a powerful motivator for prompt payment. It also removes alienation because it’s a natural consequence of continued non-payment, and an approaching black mark on their credit report spurs homeowners to resolve unpaid dues quickly.

The Ultimate Goal

Finally, a good HOA collections partner works within the HOA’s guidelines, allowing your board members to remain in control and establish any payment plans or settlement terms. The ultimate goal is to reintegrate homeowners into the community on good terms. The key is for the collection services process to happen in a way that feels like an extension of your HOA management services.

All these elements combine to make a harmonious process that resolves delinquencies quickly. In fact, many associations using this approach see recovery rates around 60-70% or higher, and collect funds in a fraction of the cost and time it used to take. Best of all, as an extension of your management service, this process maintains community unity. It’s simply a wiser, more affordable path forward.