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The correlation between collection rates, HOA culture

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Scott Setterlund

Homeowners association collection rates might be unsettling to those who believe they are exempt to pay or feel rules don’t apply to them. Most, however, do the right thing and do understand the concept of community living. Those few who buck the system, unfortunately, play a significant influence on its culture, according to a recent report by the Community Association Institute. It isn’t the people who don’t pay, necessarily; it is the failure of a Board to enforce the rules that influence the culture more. If a board fails at leadership, it gives to those who feel above it all, a free pass to not pay or to not follow the rules. This behavior sours a community.

Boards, first, should become familiar with the duties and powers given to them. Most importantl, a board member should understand that they are not collectors and should not act or function like one. Only collection agencies are authorized to collect payment.

HOA govern documents give the board an enormous amount of leverage in a court of law and the board should exercise this process. Homeowners are legally bound to a set of covenants, conditions and restrictions each buyer agrees to when signing for the title of their property. Homeowners are legally bound to follow the collection and fine procedures. Governing documents bind nonpayers into an agreement that can be upheld in a court of law. There are no exceptions.

How a board goes about collecting or enforcing is another question. Remarkably, some boards feel it is their given right to impose control over their membership. Many swell at the power they possess and posture to take advantage of others, often bullying and threatening good neighbors. To improve collection rates and a community’s culture, this is not how to do it.

“Rule benders’”contribute to homeowner disengagement and lack of respect for neighbors, their neighborhood or do not feel personally accountable to their community. Their underlining perception toward the HOA is contempt. They feel that a weak board has no vested interest in the wellbeing of their neighbors and are unwilling to establish policies to ensure collections or to enforce rules, thus creating a culture of noncompliance. This type of culture leads to a downward cycle of diminished returns.

An option to ensure that all homeowners follow the rules and pay their due is to instill a culture of compliance. A proven method would be to hire a third-party association manager. A professional manager may be able to mitigate collection issues or to advise the HOA how to amend their CCRs to protect the association from further delinquency. Boards that hire an outside service are able to focus on the wellbeing of their neighborhood and address positive, culture-building concerns, rather than attempting to be the community police.

According to Mike Madson, MGM Association Management, “I see many inexperienced boards collect dues using incorrect processes and techniques, only to create more delinquency and a lack of respect for following rules. Once homeowners get their way, they fail to understand the consequences of their actions toward the upkeep of their association. Board members lack the necessary skills to negotiate conflict or cannot handle addressing varying viewpoints.”

Scott Setterlund is community development director for MGM Association Management in Idaho Falls.

 

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