Collecting on delinquent accounts totaling $20,000 and decreasing the delinquency drama

The Problem

One of the single-family communities Model HOA manages has 23 homes nestled above Silver Creek with stunning views of the ski resorts. This community is unique in that it has its own private water company servicing only the homes in the community. The Board struggled with delinquencies for two owners for years and efforts by the prior management company were unsuccessful in resolving the two delinquency issues which totaled almost $20K when Model HOA began managing this HOA.

The Approach

Instead of trying to piece together all of the prior efforts and back and forth communications between the HOA and the owner in an attempt to resolve the delinquency, Model HOA took a step back and followed the collections policy exactly as outlined in the Bylaws. Here’s how we did it:

  • Read the Bylaws to understand the official collections policy.
  • Created a calendar to document all of the key dates and notice requirements exactly as outlined in the Bylaws.
  • Wrote the draft owner notices to be sent at each key date from the calendar along with the required documents (e.g., invoices, statements)
  • Reviewed the calendar and notices with the HOA’s attorney to confirm that they align with they Bylaws and state statutes
  • Credited the delinquent owners with the full amount past due and then re-billed the balance onto a new invoice with a current date to start the clock fresh on the overdue amount. Let the owner know (in writing via email and certified letter) that the delinquency timeline has been re-set and that the HOA will be following the collections policy in the Bylaws (many will pay at this stage when they know you mean business). Include a copy of the Bylaws, newly dated invoice, and statement from the owner showing the credit and re-bill.
  • Followed the collections policy and calendar exactly, making sure to send the notices via email and certified mail with corresponding documents at each step in the process.
  • Coordinated closely with the collections attorney throughout the process.
  • Did not engage in back and forth communication with the owner and documented everything via email.
The Outcome

One of the two delinquent owners paid up immediately when they realized that Model HOA could not be pushed around and that they would follow the collections policy to a tee. The second delinquent owner tried to derail the process by submitting dozens of questions at a time and demanding the delinquency process be stopped. Model HOA stuck to the policy and timeline exactly and this owner paid up as soon as a lien was placed on their home.

Pro Tip

Lean on a documented collections policy (create one if you don’t have one) to remove the drama from the process, send all communications in writing via email and certified letter, follow the collections policy and timeline exactly (do not deviate).