All associations need a UCP (Uniform Collection Policy) but they are not as easy to formulate as you would think.  Here are some suggestions on how to go about putting together a UCP, and enforcing it:

The first thing that has to be done is for the board and manager to read through the governing documents to understand what you can and cannot do, and when you can do them.  From your governing documents you need to find the following:

1. The due date of your association’s assessments (first of the month, fifteenth of the month ect.).
2. The grace period allowed (10 days after due date, end of month ect.).
3. 3.    See if your governing documents allow for a late fee
4. See if your governing documents allow for late interest

With that information you are now prepared to establish a plan of action, but you have to make a few decisions first.  These decisions really speak as to what your board of directors “expects” from collections.  We all know that everybody wants total recovery of the money that is owed, but that is just the result.  You have to actually determine what you expect from your collection solution.

Lots have been said and asked about the wisdom of working with delinquent owners in community associations, and allowing them to catch up using payment plans.  Some see it as a kind and wise decision and advocate that it is the correct approach.  Others seem to feel that it is unfair, and if a member of the association cannot pay on time they should be out.  Still others are convinced that most people who engage in payment plans wind up “falling off the wagon” and don’t finish up making the association whole.  My take on the subject simply is to consider the alternative.

Although our expertise is in community association collections our Senior Management Team are experts in money management, and after all when we recover association funds there are things you should know.  So here are some commonly asked questions and answers that we get from boards of directors regarding reserves:

1) What types of bank accounts are operating funds and reserve funds held in, respectively?

Answer:  Association funds should be held in financially stable, federally or state chartered banks and/or savings and loans that provide government guarantee on deposits.  As importantly, they should NOT be comingled and transferring money from the reserve account to the association’s operating account should not be a simply task to be accomplished by just one board member.  Therefore, the financial institution the association utilizes should have appropriate control procedures available to the association to make sure at minimum two active board members are involved with any transfers out OR between their bank accounts.

If you have purchased a condominium or property in an HOA, one of the documents you may be required to sign in connection with your loan is a “Condominium Rider or a Planned Unit Development (PUD) Rider.” This rider is an attachment to the document recorded in the land records to secure the note given by the lender for your purchase.  In most states including Florida, it’s called the Mortgage.

One of the most important items contained in the Condominium Rider/PUD Rider is the information regarding the maintenance fees for that particular community association. It is very important to the lenders that these fees are paid because they have an interest in the condominium unit or HOA property.  It is especially important to them if the unit has equity, because the community association has the right to foreclose on the title for non-payment of maintenance fees.