The past four years have been laborious for community association managers and boards of directors. The troubled U.S. economy has made it difficult to collect past due assessment fees from owners and mortgage holders with financial woes. Some of them may either foreclose or go bankrupt. As a result, some owners who pay on time may have to account for missing payments by incurring special assessments or more frequent regular assessments.
The Old Problem: Collecting Delinquent Assessment Fees
There are a variety of ways that community associations collect delinquent assessment fees. The most common tactics are as follows:
- An association may reduce amenities to the property to incentivize the owner to pay past due fees.
- Attorneys may take titles – in the association’s name – to property that is subject to a delinquent mortgage and either rent it out or ask the bank that holds the mortgage to foreclose.
- An association may take legal action against an owner or a mortgage holder so that s/he will pay assessment fees.
The New Angle: Advance Funding
There is a new – and potentially more effective – delinquent fee collection method. This option is known as “advance funding of delinquent assessment fees,” or selling past due assessment fees to the statutory limits.
In Florida, for example, condominium associations are entitled to 12 months’ worth of assessment fees (six months’ worth for mortgages executed after July 1, 2010) or 1% of the mortgage amount upon foreclosure or title transfer. However, it is often tough for a bank to take action on a property if the owner has clearly abandoned his or her unit. In such a case, the advance funding of past due assessments may be the best solution to solve an association’s cash flow issues.
CRI Can Help You Use Advance Funding to Collect Delinquent Fees
If you need assistance with implementing advance funding to collect delinquent assessment fees, then contact CRI’s community association team today. We are ready to offer you proactive solutions that help maximize your operational efficiencies and, ultimately, your bottom line.