Collecting delinquent assessments can sometimes feel like trying to hit a moving target. You get a judgment, but how do you account for the assessments that came due after you filed, or for the payments that the owner may have paid. By the time you can even try to execute on that judgment, the actual balance may be much higher than the court judgment. How can associations guard against that moving target, and try to make sure they stay ahead of the delinquency curve? One answer may be in your documents, and the extent to which you can “accelerate” delinquent assessments when the time comes for legal proceedings.
Acceleration is not just for the fast and furious. You’ll find it in most loan documents, such as your mortgage or car loan. If you should default on your loan (heaven forbid!, the lender has the right to declare the full balance of the loan due immediately. That allows the lender to sue for the full amount of the loan, not just the amount of any missed payments. Acceleration can put your association in a stronger position for the collection cases that go to court.
Take a close look at the language in your community’s governing documents that talk about how assessments are determined. You might find it in the Declaration, you might find it in the Bylaws. It might talk about whether assessments are imposed on an annual or monthly basis, and may talk specifically about the board’s ability to accelerate a delinquent account. Make the most of that language, and make acceleration of delinquent accounts as automatic as possible. You may want to consider adding language to your annual budget resolutions, and you might want to make it a regular part of your assessment collection process. Include advance notice to the delinquent Unit Owner in that process, and you may find you get a better response to your collection letters. It can certainly add to your leverage in negotiating a workable payment plan.
Acceleration is a board action, not something for the manager or even the lawyer. Try to make sure that it is covered in the minutes or a resolution, and certainly make sure that it is included on the account ledger before you start any legal proceedings.
Tune up your process, tune up your documnents. You just may help your collections run smoother and faster.