Managing condominium and homeowner receivables appears to be an increasing challenge as the end of 2008 approaches. For some unknown reason, some association members appear to view the monthly assessment as discretionary. To this select few, association fees do not bear the same import as the mortgage, utilities, cell phone and internet bills, or car payments. Consequently, members who may have never missed a boat payment are routinely late with association assessments. When association receivables mount, the pressure on the budget can be overwhelming. With smaller associations, one problem owner can seriously impact proper management of the property.
Proper management of the collection of association fees is critical. Successful collection requires a plan, perseverance and potentially legal process. Unfortunately, the person charged with monitoring collection activity is often times stretched thin and focused on other issues at the property. However, without the money to fund the property’s needs, the association will soon be in crisis.
Especially in difficult times, a pre-existing collection plan is crucial to the success of the association. We have all either faced difficult times or have known others who have. Every story can be compelling. Unexpected unemployment, serious illness, and divorce can all impact the ability to manage finances and pay assessments. When one chooses to own property in an association, every other owner has a right to rely on prompt payment regardless of personal circumstance. With a detailed collection plan, collection activity becomes automatic regardless of the individual story. When an account reaches a certain level of delinquency, the plan should set forth the collection process which could include collection letters, credit agency reporting, liens, collection of rents, suspension of common area privileges and services, legal action and sheriff’s sales. A planned and thoughtful approach avoids delay and insures equal and fair treatment of all members.
Once the plan is in place, perseverance is required. No one wants to collect money from neighbors and friends. However, the association, acting through its Board of Directors, owes all owners the duty to properly manage the property. This cannot be done with inadequate resources. By following through with the plan, the association can educate its members that the monthly assessment is no longer optional.