As an Association, you should consider adopting a Collection Policy if you haven't done so already. Collection Policies assist in preventing delinquencies from progressing without consequence. A Collection Policy allows for a better understanding for both Board Members and owners of why paying assessments on-time is important.
Generally, the Board must vote on implementing a Policy, but be aware that in most cases it does have to be an unanimous vote to move forward. It is important to remember that once a Collection Policy is implemented, it must be distributed to all owners of record at your Association.
When you prepare your Collection Policy, there should not be legalese terms. You want to put straightforward terms so when the Board is ready to explain the importance and reasoning behind the Policy to owners, it comes naturally.
Here are some items that may be found in Collection Policies:
1) List all charges that the policy covers (regular assessments, special assessments, fines, etc. should all be considered);
2) Stating when assessments are due;
3) If a late fee will be charged and when;
4) Whether the account will bear interest;
5) How payments are allocated;
6) Whether the Board or Management Company will send a reminder letter;
7) When the Law Firm will get involved;
8) A reminder that all costs, including legal fees, are added to a delinquent owner account;
9) Ability to suspend a member's rights and privileges, including voting privileges, recreational facilities, etc.
Although all Collection Policies should contain the above items, not every Policy will be the same. Requirements for Policies will differ between Associations, depending on the governing documents. If your Association has an outdated Policy, it is important to review it and be sure that it still applies. As always, our office can review your Association's Collection Policy and give the Board suggestions, if needed.
Please email firstname.lastname@example.org to speak with an Attorney about updating your Association's Collection Policy today.