Recent Post

HOA Collections

 June, 15, 2120

HOA Boards are constantly trying to figure out how to collect delinquent HOA dues. They're so tired of attorneys taking their money and not getting any results. What is it they say about doing the same thing over and over again, expecting a different result? And in most states, the Board can file liens themselves. Simply look at the last lien your attorney filed and replicate it. That's what they do; they simply file the same forms over and over - for a handsome fee. In a moment we'll cover how to collect delinquent assessments without resorting to foreclosure or racking up a bunch of legal fees.

Some HOA Boards expect the property manager to have a solution. All HOA management companies can do is charge $20 to $40 to send a single HOA collections letter requesting payment for late dues. An HOA management company can send notice to pay dues, but they're not debt collectors. They don't understand the Fair Debt Collection Practices Act, or how to professionally practice the art of collections without upsetting your neighbors. That's not their job.

credit reporting HOA dues

HOA Collection Agencies

However, looking for a good HOA collection agency can be a bit scary. After all, you don't want one of those contingency-based HOA collection agencies who put a lot of pressure on your community's neighbors; then have collection costs that eat up from a third to a half of your collected dues. What's worse, many collection practices require you to sign over half ownership of your accounts receivables, so your Association Board loses control. That's what happens when HOA collection services have you 'assign' your accounts over to them. So read their contract carefully! When you assign your delinquent assessment accounts, you have to pay that collection company no matter who collects the money. And it can also make selling that home a convoluted nightmare.

Homeowners Associations are looking for a smart debt collection agency option. One where the debt collection practices are gentler, yet more effective.

A professional HOA collections firm is one that properly communicates the lever of credit reporting late dues as a collection account in order to motivate homeowners to pay unpaid assessments. Here's how the process works.

How To Collect HOA Dues

The collection firm uses skip tracing to get either the homeowners' social security number or their date of birth. They also use electronic databases to ensure they have your delinquent community members' most accurate phone number and home mailing address (very important when the property is a rental unit).

After that, they mail a series of letters, each one different in size and color, letting delinquent homeowners know they'll be credit reported within 120 days if they don't pay your Board or management company. And that's a big key – Always Make Sure your agency's collection policy dictates that community members pay your Board or management firm directly. Never let a collection agency get between you and your members when it comes to the money! That may violate your governing documents. Always insist on members paying your Association or its agent directly. This eliminates what we in the collections industry call 'payment friction'. And always insist your agency allows payment plans, as your Board establishes them. Many contingency agencies do not allow payment plans; so be sure to check.

Next, a professional HOA collect service makes polite phone calls – only on days, nights, and Saturdays (no Sundays or Holidays) – again, instruction your members to pay you directly. You see, the job of a professional HOA collection firm is to locate and motivate delinquent homeowners to come to the table and pay their late dues directly to your Board or its agent. It's that simple. skip tracing, phone calls, and letters merely communicate the impending consequence of being credit reporting in order to motivate homeowners to get current.

The technical term for this kind of service is called a 'dunning agency'. However, it's important to find one that is well-versed in the verities of homeowners and property owners association's collections. When it comes to the HOA collections process and how to collect HOA dues, you want to make sure you're working with a company with years of experience working calmly and professionally with homeowners.

HOA Debt Collection Checklist

• When a collection agency has a small flat fee, your Board can add that fee to the balance each homeowner owes to recover collection costs (something you cannot do when you work with a contingency agency).

• The Federal Fair Debt Collection Practices Act establishes that it is perfectly legal to credit report HOA dues (call us if you want to see where that is in writing).

• Ask how the agency will credit report delinquent HOA dues. Do they only file a lien, or do they actually credit report any unpaid dues to Equifax, Experian, and TransUnion as a collection account? Collection accounts appear on any type of credit report. Liens don't!

• Always ask if the agency's service agreement requires you to 'assign' over your delinquent HOA dues accounts. Never allow your accounts to be 'assigned' over to anyone. It's a nightmare you simply don't need.

• Always ask for a sample delinquent HOA dues letter from any agency you're considering working with. If the letter does not instruct homeowners to pay you directly, then avoid that HOA dues collection agency.

• HOA delinquent assessment collections can be done in small claims court; however, it's best to contact your local court to get instructions and any free legal consulting they may offer.

• An HOA collections company should be licensed throughout the United States, to ensure they can legally contact property owners wherever they may be located.

• HOA collections in Florida, Texas, and North Carolina may have state-specific laws to comply with; however, as long as you're using a national collection agency you should be fine.

• A professional collection agency acts as a shield protecting your Board and Association from potential litigation. That's because an agency is solely responsible for its collection activities and upholding professional collection standards, as well as carrying millions of dollars worth of coverage for all applicable and required forms of insurance. So, your Board is much more protected than if it takes any steps to try and collect the delinquencies on its own.

You can learn more about how to collect HOA dues online by visiting or learning about a no-cost option for Association Boards at

Either way, collecting delinquent homeowners association dues is now a whole lot easier!


Recent Post

Harmonious Collections — NCSPlus Incorporated