The HOA has many functions, but at the end of the day, its primary job is the legal, fiduciary responsibility to preserve or even enhance property values. And there’s no way around it: To accomplish this goal, the HOA must collect fees and assessments. For any HOA body to be effective, then, a clear collections policy is critical.
That’s not necessarily anyone’s favorite HOA-related topic, but ignoring the issue of HOA fees is ultimately unwise. It’s far better to manage owners’ expectations properly—and that means clearly communicating the details of your collections policy.
Why HOA Fees are So Important
Just imagine for a moment trying to preserve your HOA community—paying insurance costs, keeping the common areas looking their best, and funding necessary repair work—without collecting any HOA fees. It simply isn’t possible—and that’s what makes timely fee collection so important.
More specifically, HOA fees are collected to fund two accounts. First, fees help cover the operating fund, which covers regular expenses—maintenance, insurance, water and utilities, etc. Second, there’s the reserve fund, which is the money you set aside for unexpected expenditures, emergency repair needs, etc.
It’s not fair for any one person to have to fund these things out of their own pocket, which is why the costs are evenly split between all owners who share a common interest in the community and its property values.
Tips for Communicating Your Collections Policy
Most homeowners know these things, yet there’s still a need to communicate with them the specifics of your collections policy—including:
- When fees are due, and how much those fees are
- The HOA’s policy for payment plans, for those who need one
- How fees are collected—automatic deposit, checks, etc.
- What the late fees are, and how they are enforced
- Liens and other actions taken against delinquent owners
- The owners’ rights to dispute these penalties
Make sure all owners have access to your clear, written collections policy, which should include all of these data points. Also, consider setting up reminders for when fees are due. Some options here include automated text notices, monthly newsletter reminders, or reminders posted to your Association’s social media accounts.
Clarity is key here—and while communicating about fees is never fun, it’s better than any alternative. For more insight into developing and communicating a collections policy, reach out to Kuester Management Group today.