Tackling Arrears & Delinquencies in HOAs: A Guide for Boards, Managers & Homeowners

A homeowner in arrears isn't the only one with bills piling up. Your homeowners association budgets out expenses based on 100% of its members paying dues on time. It's a delicate ballet that can bring the curtain down if enough people trip up at the same time.

1. For the HOA Board: Timely Action and Policy Adherence 🕒

• Prompt detection: Track delinquencies via monthly financial reports and board review—don’t wait until 3–6 months past due.

A strict collections policy will be able to decrease your association’s delinquency rate. You need to make homeowners aware of the consequences of not paying their dues. hoamanagement.com

• Follow HOA governing docs: Enforce late fees and interest only as authorized by CC&Rs and state statutes. 

The most important thing to remember is that you can't ignore the problem. As much as any of us hate to be the bad cop, if you're on the board, your fiduciary responsibility is to all the members of the association as a whole. If you ignore the non-payment of dues, you are doing an injustice to all the other owners in the association who are meeting their obligations. allpropertymanagement.com

• Fair, consistent enforcement: Apply rules evenly to avoid accusations of favoritism—transparency builds trust.

• Legal compliance: Ensure notices, liens, and collections follow state laws (e.g., Texas Chapter 209/TX, Colorado mandates, California credit-process requirements)

Adopting a mindset focused on resolution rather than confrontation often leads to more productive interactions and better long-term results for the community. hoalegal.com.

2. For HOA Management: Keep the Board Within Covenants & State Law

• Educate the board: Clarify legal timelines for notices, grace periods, and acceptable incentives (e.g., payment plans, late fee caps).

• Professional communications: Avoid harassment or public shaming—adhere to FDCPA and privacy rules when contacting delinquents.

• Provide structured options: Offer payment plan templates consistent with both governing docs and state mandates.

• Document everything: Emails, calls, letters, meetings—record all steps in case of future disputes or legal scrutiny.

3. How Delinquencies Harm the Entire Community

• Tightens budgets, derails projects: When dues aren’t paid, funding for landscaping, amenities, maintenance, or reserves dries up.

• Risk of special assessments or fee hikes: To make up shortfalls, boards may need to impose one-time surcharges or raise regular dues.

• Postponed improvements: Shared enhancements (e.g., pool repairs, lighting upgrades) often get delayed or dropped, affecting property values and community satisfaction.

  
  

4. Diplomatic & Empathetic Options

• Payment Plans:

  • Pros: Retains goodwill, recoups funds in installments, avoids costly litigation.

  • Cons: May be abused; require careful terms and a cap on repeat plans .

• “Meet and confer” sessions: Personal dialogue helps reach mutually acceptable solutions while preserving dignity.

• Flexible waivers: Temporarily reduce or waive late fees when hardship is demonstrated—but stay within CC&R authority.

5. Severe Measures: When Diplomacy Isn't Enough

• Collections Agency:

  • Pros: Professionalizes collections, decreases board involvement, may offer off-balance financing.

  • Cons: Can cost 20–30% of collected amount, risks community tension.

• Small Claims Court:

  • Pros: Recovers debt, can yield judgments and possible wage garnishments.

  • Cons: Requires formal filings, court fees, and no guarantees of recovery.

• Lien + Foreclosure:

  • Pros: Effective—some states allow non-judicial foreclosure, giving HOAs considerable leverage.

  • Cons: High legal fees; risks adverse publicity or “sold for a few dollars” headlines.

  • State nuances: Texas allows nonjudicial foreclosure; Florida requires court approval .

🏁 Final Thought

At the end of the day, arrears weaken the entire community—stuck infrastructure, unpredictability in budgeting, and extra costs. Homeowners who prioritize timely dues often pay less overall: late fees can exceed typical credit card or bank interest rates, adding up faster than most realize.

An empathetic Board of Directors should work with members, as best they can when dealing with accounts in arrears. But fall behind too often and you could be pushing not just your luck, but the trust of the governing body.