Tips on Collecting Unpaid Association Assessments

For many associations, assessments cover the cost of maintenance, landscaping, water, snow removal, and other important expenses. Timely payments of assessment dues are a significant part of maintaining a successful homeowners’ association. The following are collection tips for associations who have members currently past due on their monthly assessments.

1. Check the Payment Ledgers.

Whether the association itself handles monthly assessment payments from its members or is managed via a property management company, it is important that a system is in place to keep track of each member’s monthly assessment dues. If there appears to be a member, or multiple members, that are currently past due on assessments, an association’s recourse for collection can often be found in its governing documents.

2. Check the Governing Documents.

An association’s declaration may spell out the collection process and what recourse an association has for members who are past due. If the declaration makes clear that the homeowners’ association has opted into the Minnesota Common Interest Ownership Act (MCIOA), MCIOA provides statutory assessment and lien rights to the association. An association’s governing documents may not only state that past assessment dues can be collected but may also include an option for acceleration of dues and allow the association to collect late fees, interest, and any attorneys’ fees incurred as part of its collection activity.

3. Determine a Collection Method.

If an association has members who are past due, it has an adverse effect on the entire association. Unpaid assessment fees that are ignored can lead to higher fees for members who have always paid on time, special assessments, or a reduced budget for community upkeep. Ultimately, it is the association’s choice on how to move forward. If questions remain about what powers an association has regarding collection matters, the association’s attorney should determine a plan.

4. Move Swiftly.

The longer an assessment due goes unpaid, the harder it can be to recover. Association members may be missing payments for any number of reasons but if missed payments go ignored, the likelihood of ever receiving them diminishes. Once the association has determined its course of action regarding collections, action should follow as soon as possible.

5. Decide How the Association Will Accept Payment.

Depending on association members’ financial situation, it may not be practicable for some members to make a full payment on past assessment dues. Internal discussions with an association’s board, the association’s attorney, or with the association’s property management company should determine what the association is willing to do in order for its members to get current. Options may include raising an association member’s monthly dues until the debt is paid off or entering into a settlement agreement with specific scheduled payments. Such options can vary from member to member depending on the financial circumstances.

6. Be Prepared to Move Forward.

As mentioned above, an association’s governing documents may outline collection options and give the association lien rights for unpaid assessments. Filing a lien on the home puts the association in line for payment should the member’s home be sold or refinanced. Additionally, governing documents may outline how the association can bring a foreclosure action on a member’s home. Should initial collection efforts prove ineffective, an association should know what steps it is willing to take in order to receive payment.

Understanding an association’s rights regarding collection of assessment dues can be complicated. Contact an attorney to help clarify what the declaration allows and be ready to move forward with a clear understanding of your rights. Ensuring all members are current on their assessment dues is for the benefit of all homeowners in any association.