Property Managers Note Trend Toward Delinquent Association Fees

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Challenging economic conditions have made collecting Homeowners Association fees a daunting task at many communities that adversely affects all residents because of the costly litigation that is sometime required to collect overdue fees.

As property managers we take a constructive and positive approach to delinquent dues, often starting with a phone call to find out if there’s a way in which we can help the owner satisfy his or her debt,

Property management companies are reporting an disturbing trend toward delinquent home owners association fees according to Martin Laderman, President/CEO of MEM Property Management. Challenging economic conditions have made collecting Homeowners Association fees a daunting task at many communities that adversely affects all residents because of the costly litigation that is sometime required to collect overdue fees.

“Collecting association fees has become more difficult because of the large number of people who have either lost a job or had their income reduced by cutbacks at their place of employment. In response to this trend property management firms like ours are instituting creative approaches to collects that cut down on expense legal costs,” said Laderman. “Although, like banks and the Internal Revenue Service, homeowners’ associations have the power to initiate foreclosure proceedings, foreclosure is often not the best route to take.”

Laderman explains that foreclosures are time consuming and expensive. Not only do associations incur legal fees in foreclosure proceedings, but foreclosures often leave units empty for many months resulting in lost revenue for the association.

“As property managers we take a constructive and positive approach to delinquent dues, often starting with a phone call to find out if there’s a way in which we can help the owner satisfy his or her debt,” comments Laderman. “If we cannot work out a payment schedule with the owner, we then look to other means that have proven effective.”

In cases where owners seek to abandon their unit, MEM Property Management can restore the unit to rentable condition and then lease the unit to a third party. The rents are used to satisfy the owner’s debt to the association until either the bank takes over or a buyer is found.

Punitive measures that collect payment from owners who are simply avoiding payment include revoking community privileges. Laderman points out that many communities have computerized access cards or key fobs to gated entries, recreational facilities, elevators and other secure areas. It is easy to deactivate these devices in the computer system until all association dues have been paid. Tracking parking permits and towing the cars of negligent homeowners is another option, although Laderman notes that this procedure requires clear posting of the policy in accordance with the New Jersey Predatory Towing Act. Associations may also use late fees and interest charges to promote timely payment.

Laderman recommends that associations use monthly billing statements instead of payment coupon books. “A bill serves as reminder to pay as opposed to a coupon book that can get buried a drawer and forgotten,” he adds.

Peer pressure is another weapon in the property manager’s arsenal of collection techniques. Posting a list of paid and unpaid dues by unit number on the community bulletin board is effective and avoids lawsuits that could result from identifying the names of homeowners who are in arrears.

“It’s important to remember that preserving a sense of community and cooperation makes life easier on everyone…community association boards, owners and property managers alike,” Laderman concludes. “When a community runs smoothly and everyone pulls their weight it creates a better living environment, a positive reputation and in turn higher property values.”

MEM Property Management provides full-service property management to New Jersey (NJ) communities including residential apartment complexes, condominiums, town homes, and new building development. For more information visit MEMproperty.com.

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Rachel Carlson
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