Summer is here! Cue the picnics and pool parties! As we celebrate the warmer weather and the laziness of summer, it’s a good time to do a mid-year budget review on the association’s finances. We know the beach is calling, but if you make time to do a mid-year checkup, the Association’s finances can only benefit.
Mid Year Financial Checklist
- Financial Up Check – how are we doing?
- Fine-tune your Collections Policy, if needed.
- Continuing Education of Association Benefits.
Mid-Year HOA Financial Reporting:
Now is a good time to check in on the Association’s delinquency and collections progress. What does the delinquency rate look like this far into the year? Hopefully, you have no delinquencies, but if you do, are you following the association’s collections policy in handling those delinquencies? Is this getting you results, or does the association need to make some tweaks?
Review the Results and Make Adjustments, if Necessary:
As we discussed earlier this year, a good collections policy provides guidance for when an account should be placed in collections according to the association’s needs and interests. It also provides enough flexibility to allow the Board to exercise its discretion and make accommodations for owners facing difficult situations. This is a good time to see if your collections policy is meeting all of these goals, or if some tweaks are needed. While the most straight-forward measure will be how much you have collected compared to what was previously unpaid, you may also want to see if the policy is too rigid or too lenient.
If you have agreed to a payment plan with an owner check to see if he or she is meeting the deadlines Do you have any idea? A good rule of thumb is to have written payment agreements or at lease memorialize the agreement in writing. It doesn’t need to be fancy, but a simple email setting out the date, the amount owed, and the dates payments are due will at least put everyone is on the same page. An agreement memorialized in writing and signed by the homeowner may also help later on if the homeowner does not follow through.
As a board of directors, you may also want to set some ground rules during your HOA budget planning about late payments and default. For example, if you reach an agreement with someone to pay on the 5th of each month, are you going to consider that payment late on the 6th? The 10th? The 15th? Do you want to allow for a grace period for mailing the payment? To put it another way, are you willing to cancel the payment plan if the payment arrives on the 6th?
It’s also a good time during your mid-year budget review to check for issues of lien protection and statute of limitations. If you’ve sent out late letters and reminders, and not received a response, it may be time to escalate and place a lien on the property, especially if you are a common-law homeowners association, and not a condominium or subject to the Georgia Property Owner’s Association Act. If the owner agreed to payment plan, but then didn’t pay, are your balances getting close to the 4-year statute of limitations?
Long-Term Continuing Education:
There will always be opportunities to highlight to your members the benefits of living within a community association, and, in particular, the need to pay assessments so that the association can continue providing those benefits. While the legal obligation to pay assessments is independent from the association’s obligation to provide services, we all like to know that we’re getting good value for the money we pay.
With demand for real estate and property prices surging in many parts of Georgia, this is a great time to remind members of how the association, through its board of directors, has enhanced and protected their property values by enforcing community standards. If you’ve had new neighbors move in recently, it’s a great idea to welcome them to the neighborhood, provide contact information for management and board members, and also let them know what benefits they get from being part of the community. They may even be interested in opportunities to serve on the Board or committees. Setting the right tone up front is always a plus.
Our attorneys would love to help you get a handle on your delinquencies. Contact us today!