6/18/25

Assessment Collection Policies: Best Practices for HOAs and Condo Associations

Overview:

Timely assessment collection is critical to the financial health of homeowners associations (HOAs) and condominium associations. Boards have a fiduciary duty to collect assessments systematically and fairly, ensuring the community has the resources it needs for maintenance, reserves, and operations. Here’s how to craft an effective assessment collection policy and enforce it responsibly.

Why a Formal Collection Policy Matters

Your governing documents and state laws provide the authority to collect assessments, but a clear, written policy is essential for:

• Ensuring consistency and fairness in handling delinquent accounts.
• Protecting the association’s financial stability.
• Communicating expectations to members to encourage timely payments.

A well-crafted collection policy helps members understand the community’s financial needs and reduces misunderstandings about payment deadlines or enforcement actions.

Characteristics of an Effective Collection Policy

An effective policy should include the following:

1. Board Approval and Documentation:
   • Adopt the policy through a formal board resolution.
   • Define the problems it addresses (e.g., delinquent payments).
   • Outline procedures and the circumstances that trigger actions.
2. Clearly Defined Powers and Procedures:
   • Ensure all actions align with the association’s governing documents and legal authority.
   • Establish a firm due date for assessments and detail specific steps for addressing delinquencies.
3. Flexibility for Special Cases:
   • Allow for discretionary actions in cases of hardship, with the burden of proof on the delinquent owner.
4. Referral to Legal Counsel:
   • Specify when delinquent accounts are sent to legal counsel, ensuring a consistent process.
5. Cost Recovery:
   • Include provisions for recovering all costs related to collection, such as legal fees and lien filings.

Recommended Timeline for Collection Actions

Delinquent assessments harm the entire community by reducing available funds and placing an unfair burden on compliant members. A clear, aggressive, and systematic approach ensures fairness and promotes compliance.

Here’s a suggested timeline for handling late payments:

• Day 1: Assessment is due.
• Day 15: Assessment is officially delinquent.
• Day 20: Friendly reminder sent by the property manager or treasurer.
• Day 27: Account referred to legal counsel.
• Day 30: Legal counsel sends a demand letter, including notice of a potential lien.
• Day 40: Lien is recorded, and the owner is informed.
• Day 60: Foreclosure or personal suit begins if no resolution is reached.

While this timeline may seem aggressive, swift action often prevents long-term financial strain on the association. Filing liens or pursuing foreclosure emphasizes the seriousness of delinquent payments, motivating owners to resolve their debts promptly.

Communicating the Policy to Members

Transparency is key to gaining member support for the collection process. To encourage timely payments:

• Share the association’s budget and explain how assessments fund essential services.
• Distribute the collection policy to all members and ensure it is applied uniformly.
• Offer clear guidance on how members can request hardship considerations if needed.

Final Thoughts

A robust assessment collection policy protects your community’s financial health and ensures fairness for all members. By enforcing clear procedures and taking prompt action on delinquencies, your board can minimize financial disruption and maintain trust within the association.

If your association struggles with delinquent accounts, consult legal counsel to ensure your collection policy complies with state laws and governing documents.