As an Association, you should consider adopting a Collection Policy if you haven't done so already. It is commonly found in Association documents because it assists 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 start to prepare your Policy, there should not be legalese terms. You will 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 can be found in Collection Policies:
1) Stating when assessments are due;
2) Whether a late fee will be charged and when;
3) Whether the account will bear interest;
4) How payments are allocated;
5) Whether the Board or Management Company will send a reminder letter;
6) When the Law Firm will get involved; and
7) A reminder that all costs, including legal fees, are added to a delinquent owner account.
Although all Collection Policies should contain the above items, not one Policy will be the same. Requirements for Policies will differ between Associations, depending on their 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 If your Association has an outdated Policy, it is important to review it and be sure that it still applies.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 Policy and give the Board suggestions, if needed.
Please email email@example.com to speak with an Attorney about updating your Association's Collection Policy today.