Dues and assessments are the lifeblood of any homeowners association. Ensure the inflow of cash with the help of the best HOA collections services.
For homeowners associations, member dues are their primary — and, sometimes, only — source of income. These associations use these dues to pay for various operating expenses in the community. A portion of these dues also go into a separate account, called the reserve fund, to pay for future major repairs and replacements.
But, what happens when homeowners stop paying their dues?
Delinquencies are nothing new to homeowners and condo associations. Homeowners will sometimes default on their payments for a number of possible reasons. And while one or two delinquent accounts may not significantly affect the association, failing to act on them sends the wrong message to other owners. As a result, more owners may follow suit and stop paying their dues.
A high delinquency rate is sure to impact the financial health of the association. When the HOA does not get the funding it requires, it will be forced to cut back on much-needed expenses. This will lower the quality of service in the community, which will inevitably lead to poorer curb appeal and lower property values.
Another option is to source the money through other means, either by levying special assessments or taking out a loan. Although these avenues are not bad per se, they are not always necessary. Plus, it is unfair to paying owners because they will essentially need to pay more to cover the faults of non-paying owners.
Collections are an important part of running an HOA community. Enforcing collection actions not only ensures better cash inflow but also discourages owners from defaulting on their dues and assessments. While board members can collect unpaid dues on their own, nothing beats the expertise of an HOA collections service.
Despite what some people might think, HOA collections don’t only involve communications. It is not as simple as knocking on an owner’s door and asking them to settle their unpaid dues. A full-service collection agency can help homeowners associations with:
No two collection companies are exactly alike. Some offer services others don’t, while pricing can vary dramatically from one agency to another. If you need a good company to serve your HOA, here are the best collection services for homeowners associations:
For boards that wish to outsource their collection efforts against delinquent accounts, HOA Collection Services is a good place to start. Once the service receives the delinquent account, it begins the collection process. It sends all the required letters and notices to the owner and works to recover the debt with the help of payment plans. As for the payment itself, HOA Collection Services uses secure payment methods as well as ACH transfers.
Associa works closely with your HOA board to implement payment plans that favor all parties involved. The company offers full collection services, including lien recordation, litigation, and foreclosure actions. It also partners with a contingency-based third-party collection agency for debt collection. Associa caters to communities of all sizes, even helping large associations reduce their delinquencies.
The selling point of Community Collection Service is that homeowners associations get to keep the entire collected amount. It does not operate on a contingency basis. Instead, the service charges a one-time flat rate of $250, which is added to the homeowner’s balance. Community Collection Service also partners with an accredited accounting firm to monitor all transactions.
Because the company does not use a contingency approach, its debt collectors are more like salaried employees rather than agents. They are not pressured to earn a commission. Thus, the collectors — or collection counselors, as the company calls them — are less aggressive or confrontational.
With HOA Collections LLC, homeowners associations can expect a seamless collections process from start to finish. The company creates a solid timetable for the collection so associations know how long before they can recover the debt. The company also has remedies in place in case an owner files for bankruptcy or allows their first mortgage holder to foreclose.
In terms of cost, HOA Collections LLC provides rough estimates to associations, who will need to create an account to get started. The company also requires a copy of the HOA’s collection policy among other documents. HOA Collections LLC boasts a combined 75 years of experience among its staff, so associations can rest easy knowing their collections are in capable hands.
Southwest Recovery Services specializes in debt collection, negotiation, mediation, and arbitration. They also assist HOAs with pre-legal collection procedures, post-legal collection procedures, and judgments from outside the areas they serve. Aside from that, they provide detailed reporting to clients to keep them informed of the status of their accounts. This comes at no extra charge.
Like many others, Southwest Recovery Services uses a contingency-based approach to debt collection. There are no upfront fees, and associations only pay the fixed contingency rate after the agency successfully recovers the debt.
Delinquent accounts are a huge problem for homeowners associations. It not only sets a bad example for other owners but can also seriously cripple an association’s financial health. To mitigate risk and ensure liquidity, it is imperative to turn to the best HOA collections services.