Collections in an HOA, How Hard Can it Be?

I have a large following of small HOAs. They are a segment of the HOA industry that is under-served. Recently a board president purchased the HOA SMALL ASSOCIATION SURVIVAL GUIDE from my webstore out of his own pocket money (because the association is in dire financial straits) and then emailed me and asked this:

“Regarding questions, I did a quick glance through the book to see if I could find anything regarding the processes we need to go through during and following the process of placing a lien on an owner’s property. Is there a page where this is discussed? Thank you again.”

Boy, I wish I could say there was “a page” where all the answers could be found.

Below is my answer. I am sincerely sorry that it is impossible to find all the answers in one place and that so many people cannot afford to avail themselves (or find the time for that matter) of all available resources. This is what I had to say in an effort to help him understand the complexity, and how to find the answers to a specific inquiry:

Collections are a can of worms. There are a lot of references in the book to the difficulties boards can face if they do not get help. I recommend getting help from the HOA collection companies if you have to get assertive about collections.  Here is one key point (see below) in the Survival Guide. In fact, there are 5 assessments and collections Primers and Forms in my store that are $25 each – and it took 5 because the area of law is voluminous and detail oriented when it comes to HOA collections. Much of the process speaks to nonjudicial foreclosures and those follow closely the rules for foreclosing on a home and so there are many, many specific notice requirements. It is best of course to be proactive from the beginning – and to do that you need good processes in place. And especially know that recording a lien without following all the legal requirements can really backfire on the Association.

I pointed out a KEY POINT in the SURVIVAL GUIDE. In doing so I found a typographical error which I will correct (and own up to it here for I am not perfect).

As you can see, I try to provide the best information I can to cope with these difficult issues.

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Key point (and I actually found an error to correct in the highlighted words below (“do not do collections” says “do not know collections” in your book). FROM THE SURVIVAL GUIDE in the assessment chapter:

 Key Point: This is another area where red flags should pop up if a board has any difficulty collecting or understanding calculations, budgeting (upon which assessments are based), proper allocations of assessments, or collecting assessments. It is complicated! A wrong move could invalidate an assessment. Missing a deadline or notice requirement could invalidate or unravel an assessment or cause a board to take a step back and start over. There are companies that specialize in HOA collections. Although I included collections in my work many years ago, I do not do them anymore. It is a paper intensive /detail oriented manner of business and although I still do some consulting still with regard to difficult matters, the day to day drudge of it caused me to put more focus on other areas of representation. If the HOA receives any flak from an owner, or a bankruptcy or legal notice of any kind relating to assessment collection, get thee to a lawyer and get some help!!

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This dialogue was a good exercise and I hope it helps someone out there that is asking “Collections in an HOA, how hard can it be?”

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