Boards that care for HOAs without a full-time manager are busy! The work never ends, and it can be hard to prioritize responsibilities when everything feels important. Sometimes, tasks, including collecting late fees or assessments, get pushed back until the next month. No big deal…right?

Unfortunately, having even a few late accounts can create a budget problem for smaller associations.

Table of contents

What are HOA fees used for?

What are HOA collections?

Why HOAs delay collections

The costs of waiting for payments from owners

How long is too long to wait?

Example of a collection schedule

What to do if late payments are a recurring issue

Want to reduce the stress and uncertainty of managing unpaid HOA dues? Read on to find out how long is too long to wait to collect late fees from owners, and how your board can encourage more on-time payments.

Please note that this article is intended to only provide information. It should not be used as legal advice. Always tailor collection timelines and notices to your governing documents and state law, and have a trusted HOA attorney review your collection policy once before you put it into practice.

What are HOA fees used for?

HOA fees, also known as assessments or dues, are fees paid by all owners who live in the association. Unlike condo fees, HOA fees are usually the same for every owner.  

The money is used to pay for ongoing operations and maintenance of the community. The fees cover a wide range of services and amenities, including:

• Landscaping
• Common area maintenance (clubhouses, pools, playgrounds) 
• Insurance
• Services provided by third parties

A portion of the fees is also deposited in the reserve fund.

Fees may be collected on a monthly, quarterly or annual basis, depending on the HOA’s process. Amounts are determined after an annual budget is established.

It’s not uncommon for fees to increase every year; however, there may be limits on how much fees can go up without a vote from owners. For example, in California, notwithstanding more restrictive limitations placed on the board by the governing documents, regular assessments can be increased by up to 20% without requiring approval from owners. Associations must still provide individual notice of any increase in regular and special assessments.  

What are HOA collections?

HOA collections refer to the process of pursuing unpaid fees from owners who are behind on their payments.

When an owner misses one or more regular assessment payments, the association has an obligation to recover those funds. That is because they have already been calculated into the annual budget.

If enough owners fail to make a payment, the HOA could find itself unable to cover monthly bills. As a result, it may not be able to complete work that helps to keep people safe or maintain property values.

Why HOAs delay collections

On occasion, HOAs may be slow to follow up on late payments. This can occur for several reasons.

No written collection policy

Without a board-approved collection policy, every late payment case feels unique, and it can take weeks to determine the best next steps.

A policy states exactly when payments are due, when payments are considered late, and what owners can expect when payments are not made on time.

The CAI explicitly recommends that every association adopt, and annually distribute, a written collections policy to ensure timely, fair, and consistent action.

While many states do require community associations to create and share a board-approved policy, it is not yet mandated in every state.

Neighbor-to-neighbor discomfort

Boards of self-managed HOAs hesitate to send stern notices to their neighbors (and perhaps their friends).

It can be awkward, and they don’t want to be mean. But at the same time, the board cannot look the other way and ignore a late payment. Not only does this hurt the community’s finances, but doing this could invite accusations of selective enforcement.

Unsure about timelines

Since there is no standard for collection processes, boards might be confused about when to follow up or move to the next step. They worry about “getting it wrong,” so they wait.

There is simply too much manual work to do

If most or all owners are paying by check, payment processes are guaranteed to be slower. As a result, boards might be more lenient about due dates since they are working hard to keep up.

The costs of waiting for payments from owners

While you might think you’re doing your owners a favor, there are some serious costs associated with ignoring late payments.

• Cash-flow strain – high numbers of delinquencies may force the HOA to issue a special assessment or take out a loan. Owners who have paid on time will not be happy that they are being asked to pay more money to the community
• Higher costs for owners who are delinquent – statutes often allow interest and late fees on unpaid assessments. Delays compound what owners ultimately owe
• Harder to collect payments as time goes on – self-managed communities frequently see collections stall for several months or even years. The longer the wait, the less motivated owners will be to change their behaviors  
• Lower property values – if HOAs cannot afford to pay for projects or regular maintenance, the property suffers. Sidewalks start to crack, pools must be put out of service, plumbing leaks create long-term damage

How long is too long to wait?

So, is a payment considered late if it is not received by the 1^st of every month? Technically yes, but most associations have a grace period, typically 15 days. Once that window closes, the penalties start to kick in.

Again, ensure you have checked state laws and your HOA’s collection policy to see what is required in your community.

After the grace period ends, the next step usually requires delivery of a delinquency notice to the owner. This document outlines what is owed, if and when late fees/interest apply, and what will happen if payment isn’t made by the deadline.

Example of a collection schedule

Below is an example of how an HOA may want to handle the process of collecting late assessments from owners.

Timeline	What happens
Day 0 (due date was yesterday)	Courtesy reminder stating payment is due.
Day 10 to 15	Final reminder that states amount owed, instructions about how to pay.   Send this earlier if it’s being delivered by mail or if payments are generally made with a check.
Day 16 to 30	Formal late notice per governing documents/statute.   Offer a payment plan if applicable and internal dispute resolution if required in your state.
Day 45 to 60	Pre-lien notice, if legal in your state, if assessments are still unpaid.
After day 60	Record the lien; consider next steps (rent-demand where allowed, attorney referral).

What to do if late payments are a recurring issue

You’ve got enough to do without having to chase late payments every month. If this problem is taking up more time than it should, consider the following steps to help your HOA reduce late payments.

Online payments

We can pay for almost everything online. HOA assessments shouldn’t be the exception. HOA Sites integrates with Stripe so that owners can pay fees online.

Payments are handled online, directly through your user-friendly website. HOA Sites also tracks and records all transactions in a single location, giving boards and owners more clarity about when payments were made.

Online payments are far easier and more convenient than checks, and most communities see a noticeable reduction in late payments when owners have the option to pay online.

Provide adequate notice

Statements for assessment fees are typically sent at the same time each year, so owners eventually expect them. A best practice is to send statements 30 to 45 days prior to the first payment due date in the new fiscal year, unless your governing documents have a different timeline.

If the assessment fee is not paid by the due date, follow up with a reminder letter asap. Give the owner as much time as reasonably possible to remedy the situation. If they continue to ignore payment demands, the HOA can at least demonstrate that the owner had plenty of time to reach out and discuss the issue.   

Offer a payment plan

Sometimes life hits hard, creating unexpected financial constraints for owners. Providing the option to make several smaller payments over time can help both parties.  

 The payment plan should be aggressive enough that it brings dues up to date before the next fiscal year begins. This helps to prevent confusion and further delinquencies. If a payment plan extends past the next fiscal year, it’s best to include the future billing amount (which could be higher) in the payment plan.

Escalate consistently – and carefully

Follow your collection policy as closely as possible. There are always reasons to make exceptions, but in most cases, the board should respect timelines and penalties to avoid additional complications. If owners know they will be charged a late fee for paying late, they’re less likely to ignore due dates.    

 

If all else fails, seek legal assistance

In most cases, diligent and consistent collection efforts by the board will resolve most situations without requiring assistance from a third party. However, if you have not gotten a response from an owner after sending multiple notices, you may need to escalate the problem.

An attorney can assess the entire situation and advise the association about what it should do without exposing itself to additional complications. Be mindful that state laws generally dictate what information you must send to a delinquent owner, as well as the delivery method you must use, before you can turn over the account to an attorney.