Case: Collection of Past Due HOA Assessments
Background: Waterway Palms Plantation is a developed community in Coastal South Carolina, encompassing 759 lots total—114 of which either have a home already or are midway through the building process. The community has three gated entrances, 20 fountains, and a number of lavish amenities—including gym facilities, tennis courts, large swimming pools, boat storage, and, the true centerpiece, an $8 million clubhouse.
Problem: Waterway Palms’ developer sold many of the lots right at the height of the real estate boom. Buyers enthusiastically responded to these new, upscale homes and the pristine surroundings. Then, in 2007, the bottom fell out of the real estate market and these homes were suddenly not worth anywhere close to what they had been bought for. Like other communities throughout the country, many owners quit paying their mortgages and taxes, to say nothing of their Association dues. This naturally left the community in the lurch, and for several years the Association struggled to find the funds needed for the upkeep of the lavish amenities. Meanwhile, many homes were lost to bank foreclosure.
Action: Working on the advice of Kuester Management Group’s Phil McLeod, the community hired a full-time, on-site manager to meet many of the community projects and economic challenges head-on. The Kuester manager was hired in September 2014, and proceeded to review all delinquencies and research every lot to determine ownership. The manager collaborated with a collections team and an HOA attorney to foreclose on delinquent homeowners—at a third the rate most other attorneys would have charged.
Outcome: Through the aggressive enforcement of the Board’s own Collections Policy Resolution, the manager and collections team were able to clear more than $169,002 of debt from the Association’s books. An additional $87,623 was written off due to bankruptcy, tax sales, and foreclosures, while $81,378 was actually collected. In less than nine months, the team—led by a Kuester manager—was able to reduce the community’s past debts by 38 percent.