Tuesday, October 1, 2013

$Money$, $Money$, $Money$

A homeowners association looking to change management companies recently reached out to us.  In our daily lives, we often hear about problems with time management and stress management, but with Boards of Directors - it is really all about expectations management.   This particular community summarized their current situation as follows:

Our dissatisfaction mainly rests within the lack of aggressive follow-up with those homeowners who are behind on their association dues.  Our current management firm basically takes the approach of sending out delinquency letters over and over again, with no further consequences (besides late fees and/or common area access restriction). This pattern, in some cases, has made matters worse since many homeowners believe that they can just stop paying because no further action/consequences will follow.
We need reassurance that a new property management company will perform at a much higher level.  Please provide details on how you would take immediate action with specific individuals and plans for others who may not be as delinquent, but still pose a risk to our community’s financial health. We recognize that some homeowners may not end up paying.  If this is the case we need reassurance that non-payment will, at a minimum, result in swift consequences to the full extent allowable by law.  
Access Management Group has very strong feelings about the homeowner delinquency issue, and it is frustrating to us when a client refuses to take a firm and fair stance when addressing it.  To be successful, a Board of Directors must draft a resolution outlining what the steps are in collections (we assist with this), which they provide to management and to the collection attorney, and then the Board steps out of the process to avoid having homeowners attempt to play different parties against each other.
The most effective process we’ve seen outlined in a resolution is as follows:
A late notice is sent by the third week of the month to any who failed to pay by the due date.  A second late notice is issued the following month, and then the account is turned over to the collections attorney.  Once in the attorney’s hands, the homeowner is only permitted to communicate with the attorney until the debt is resolved (i.e. requests for payment plans must go through the attorney, who forwards to the management company).  The Board of Directors provides the management company general guidelines to use in making some decisions on payment negotiations.  For example, any payment plan for a period longer than 12 months is automatically barred unless the amount is greater than $5K, in which case the Board must be consulted.
The other key component is to have the correct law firm to handle collections.  An association can choose to have one law firm handle all of its legal needs, or can choose to delegate collections to a separate firm.  From our thirty plus years of experience in the Atlanta market, we have identified those firms which are the most effective in obtaining collections results, and would ask that the Board consider one of these if they are unhappy with their current firm. 

All the nuances of collections are easily a two hour conversation, but Access Management Group has a handle on this and our clients can rely on us to push for the best results.  To provide a  recent example:  A community that came on with us at the start of the year switched to a firm we recommended, and has collected nearly $100K as of September – with another $150K being setup on payment plans.  Other financially distressed communities that have been with us the last few years have seen collections of $100K to $200K each year.  We take this matter seriously.  If you have any questions about this matter, we are always available to consult.

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