How a Community Association Management Company Handles Non-Payments


Non-payment of Community Association fees is an inevitability that all associations will need to address at some point.  Addressing non-payment can be uncomfortable since board members are members of the communities in which they govern. Therefore, it is a good idea to allow a third-party management company to step in and help handle some of the unpleasantries of management like non-payment. Here are some of the ways that management companies approach one of the tougher issues in community associations.

1. Come Up with a Grace Period and Late Fee

Most community associations have grace periods built into their governing documents; the time frame of which can vary from community to community.  It is important to clearly communicate the grace period to homeowners so that they can plan financially and know how much time they have to make payment before late fees could be applied.  Creating a late fee is a sufficient way to get a message across without being too aggressive. The threat or application of late fees can be a good incentive for garnering payment.  However, sometimes, even a late fee isn’t enough to collect payment.

2. Payment Plans Can Be Implemented

Sometimes a bill falls so behind that they amount has become too high for a payer to pay in one installment. Fortunately, with the help of your management company’s accounting services, a payment plan can be implemented at no further stress to you.

Payment plans make the balance more manageable for the paying community member and help bolster cash flow so that the money your community needs is coming back into your accounts. Payment plans are usually the last steps before negative consequences (aside from late fees) are applied to a community member. A clear understanding of these consequences is required for a payment plan to be successful.

3. Access Can Be Restricted

One perk of living in a well-managed community association is the amenities. If payment continues to be delayed, a further step that can be taken is to restrict access to said amenities like:

  • Pools
  • Tennis Courts
  • Fitness Centers
  • Clubhouses

Restricting access to amenities is one of the strongest and most cost-effective ways that community associations can enforce collection of assessments.

4. HOA Association Management Handles the Painful Steps

The final steps lead the community into legal territory including an official attorney demand letter, lien, and potential foreclosure. Most governing documents will outline which steps the association has at its disposal to aid in collecting on delinquent accounts when other methods do not work.  It is at this point in the process that bringing in a collections attorney (preferably one well-versed in community association collections) is recommended.  The legal process is intricate and if not done properly, can open the association up to lawsuits; so it is important to have a team who knows the laws, how to communicate with residents, and can make sure everything is done by the book.

Goodwin & Company Takes Care of the Tougher Parts of Community Association Management

Collecting on delinquent accounts can always be difficult.  On one hand, you want to be considerate of your members’ individual situations and work with them where you can. But on the other hand, you need to make sound business decisions for your association and ensure it is financially stable.  By working with Goodwin & Company, we can handle these payment situations and allow you to focus on the other aspects of serving your community. Get in touch with us today to find out about our financial services and how we can benefit your community.