Dealing with NSF Checks

Question: One of our members is refusing to pay his annual dues. He has sent us NSF checks and simply does not seem to care. His property is unkempt and no longer lived in. What are our options?

Answer: You need a Collection Policy which complies with your governing documents and that details the specific collection steps that will be taken in the event of non-payment. Typically, those steps should start when a payment is no more than 30 days late. After several written notices, the matter should be turned over to an attorney who specializes in HOA collections. Attorneys can file liens against the property and get personal judgments against the creditor. But often, an attorney’s letter outlining the possible penalties is enough to prompt payment. There is a sample Collection Policy available at Regenesis.net.

Move In/Move Out Fees

Question: Recently the board enacted a Move-in/Move-out fee which only impacts landlords. Is this in compliance with the governing documents?

Answer: While the board can impose certain use fees and rule penalty fees when they apply, Move-in/Move-out fees that only affect rentals should be challenged by landlord owners. If the HOA actually incurs costs when a resident moves, all residents, whether owner or renter, should pay the charge. But too often Move-in/Move-out fees are a not-so-subtle way of penalizing landlords. On the one hand, the member majority (as defined by the governing documents) can restrict or eliminate rentals with a proper vote. But the board’s singling out landlords for special fees is discriminatory. Further, the board does not have the authority to modify the fee/dues structure defined in the governing documents by invoking a special fee on certain classes of owners.

Management Fee Formula

Question: How do management companies determine the fees charged to homeowner associations? Is there some standard rate or is it based on a percentage of revenue?

Answer: HOA management companies generally charge a base monthly fee which is expressed as a "charge per door" (the fee divided by the number of units). However, that charge varies a lot depending on the number of units and the scope of management work. The base fee takes care of routine tasks like managing the HOA’s money, responding to member requests, managing maintenance and contractors, attending regular meetings, etc. Non-routine tasks like writing a newsletter, transcribing meeting minutes, billing and collecting a special assessment, managing a renovation project and processing insurance claims often carry an additional charge which varies depending on who is executing the task (manager, bookkeeper or clerical).

Condominiums and other common wall communities usually pay substantially more for management than non-common wall communities that contain single family homes with very little common area. In the latter, bookkeeping is the primary task with relatively little if any time needed to maintain common areas.

For more innovative homeowner association management strategies, see Regenesis.net..

Published: April 7, 2010

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Richard Thompson owns Regenesis, a management consulting company that specializes in condominium and homeowner associations. He is a nationally recognized expert on HOA management issues. Regenesis publishes The Regenesis Report, a monthly newsletter for HOA boards, developers and managers. To subscribe, go to Regenesis.net. He can be contacted by email at .