What’s the Big Deal if I Don’t Pay My Maintenance on Time?

By Karen Arena, CMCA
delinquent payments

I attended a homeowners meeting earlier this week, and the subject of delinquent payments came up. Of course, this community had its fair share, but the overall sentiment was that the delinquencies weren’t necessarily because owners couldn’t afford to pay. This community has a low annual assessment (maintenance fees), as it’s a simple homeowners association with not much common property to maintain. The thought was that owners fall behind because paying their maintenance isn’t a priority, and they just simply forget. I can see how that happens if you’re not using auto-payment methods. After all, the community’s monthly/quarterly assessment doesn’t mean as much as paying other bills, right? WRONG.

The annual assessments are based on the community’s yearly budget. The total annual assessment is the amount of income that the board decides is needed to manage the property. Remember, a community association is a corporation that needs income to operate. The community usually has no other income sources, so the assessments, or fees, are what makes it run. Think of it like public broadcasting, without support of its membership, the money runs dry. But even public broadcasting has other means of income, like corporate or government sponsors, that community associations do not have.

Let’s think about the consequences of delinquent payments, and the downward spiral it could create:

  • Increased annual assessment to cover the deficit – the annual maintenance fees increase for all owners.
  • Important maintenance projects get deferred due to lack of funds.
  • Your property begins to look run-down due to lack of maintenance, sinking the community’s overall property value.
  • Shortfalls piled on to the following year’s budget, again driving your fees up.
  • The association is sometimes forced to borrow from other restricted funds, like reserve accounts; or from a bank or other lender for important maintenance projects.
  • Frustration and potential conflict between paying owners and delinquent owners.
  • And lastly, if it’s gotten very bad, the inability for new owners to obtain mortgages on properties in your community.

So it’s significant for all association members (owners) to support their community by paying their maintenance fees regularly. Even when owners fall on hard times and need some relief, Sterling managers have found that boards are reasonable with owners and happy to work out a mutually beneficial payment plan. But without that communication, the board has no choice but to enlist the help of legal counsel to collect delinquent fees. And, if letters from the management company or the lawyer go unanswered, the lawyer then accelerates the collection process through the filing of liens, or even foreclosures against the property, or a personal money judgement on the owner. All of these actions cost money that the owner is ultimately obliged to pay. In the end, it’s the entire community that really ends up paying.

Everyone who lives in a community is interested in keeping its property values high, no question; and that’s directly related to the money collected regularly from the association’s members.

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