Introduction—Background and Key Points
Association directors have many of the same responsibilities as the directors of General Motors, General Electric, and other large corporations. It's not unusual for a board to be responsible for millions of dollars in real estate and hundreds of thousands of dollars in assessment fees. Given this fiduciary responsibility, association boards must collect assessments in a timely, systematic manner.
The financial position of the association has a direct and substantial effect on every member. Without adequate funds, the association can't meet its obligations to provide the maintenance and services mandated by the governing documents. Poor maintenance of the common areas and units can diminish property values over time.
This guide will help associations create and apply a collection system and avoid a legal confrontation. Recognizing that no policy will cover all aspects of assessment collection for all communities, each plan must be flexible and fair and must comply with the governing documents of the association, as well as any applicable laws.
For detailed information on the legal aspects of collecting delinquencies, see the companion guide, Delinquencies: How Community Associations Collect Assessments.
Key Points
- The association declaration and state law give associations the authority to collect assessments.
- Each association should adopt, by resolution, the procedures for collecting assessments. The procedures should clearly cite the association's authority and the penalties for noncompliance.
- Simple, direct, and repeated communication with the owner is the most effective means to facilitate collections. Understanding fosters cooperation, and cooperation means a less time-consuming collection effort.
- Collection problems can stem from a misunderstanding that might be settled easily. Small problems should not be allowed to develop into hard feelings between an owner and the board or association manager.
- Treat all owners equally and impartially.
- Pursue all authorized non legal remedies to collect fees, including suspension of privileges, late fees, and communication with the lender, before initiating legal action.