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*** Community Association Collections ***

Unpaid Dues…A Free Ride?

Unpaid dues and assessments are a constant burden on property owners associations and a major headache for managers and board members.

The property owner who expects a free ride by ignoring his financial obligation to the association is, for all practical purposes, passing his debt on to his neighbors. This is the net effect, for the unpaid bill must be absorbed and paid by the (increased) dues on the paying members.

If allowed to go unchecked, this problem will result in a severe financial crunch as well as widespread irritation among the paying members.

Paying members demand and deserve nothing less than equitable sharing of the burden.

In my personal experience as a professional collection agent, I was asked to attend an open board meeting a few years ago and the opening remark from a member in attendance was “What are you doing about the members who aren’t paying?”

The answer, of course, should be “...prompt and continuing attention to the slow payers and professional help on the seriously delinquent who are not coming forward with an effort to pay.”

Such professional help may be 1) a professional collection agency, experienced in this area of collection or 2) an attorney. Bear in mind that an attorney’s actions (especially, if not specializing in this field), may be confined to writing a letter and suing for judgment. Also, consider that an attorney’s overhead, being greater than that of a collection agency, necessitates fees and advanced costs greater than that of a collection agency.

While admitting to prejudice in this regard, I believe a collection agent on the other hand will familiarize himself and his staff with the constitution and by-laws and can rationally and patiently refute most of the standard excuses offered by delinquent members. An agency can also, if networked with the American Collectors Association, pursue and even refer for suit, any debtor anywhere in the country. And, most important, an agency will work on a contingent fee basis (no collection-no fee).

Bear in mind, however, that time is every debtor’s ally. The longer a debtor is allowed to ignore a debt, the more factors against successful collection pile up; such as marital status, health or income problems, changes of address (usually leaving no forwarding address) and, of course, the mental attitude that comes from having gotten way with it for so long.

The delinquent member who is brought current promptly, will probably remain as a paying member versus the long delinquent member whose obligation has piled up beyond his willingness or ability to pay and who thus becomes a drop out who completely defaults and has to be sued.

John Debold
Managing Partner BCA Financial Services