Duty to Collect
. Boards of directors have a duty to levy regular and special assessments sufficient to maintain the common areas. (Civ. Code §5600(a)
.) To carry out their duties to the membership, boards must establish a collection policy
and then properly implement that policy. When an owner defaults, the association may file a lien on the owner's interest for the amount of the fees. (Civ. Code §5675)
.) If the default is not corrected, the association may pursue any remedy permitted by law, including judicial foreclosure or foreclosure by private power of sale. (Civ. Code §5675
Uncollected assessments are an asset belonging to the membership. Failure by the board to collect that asset puts a burden on paying members who must make up the difference in the association's budget. Uncollected assessments can result in higher dues, special assessments and reduced services. Leaving delinquent assessments uncollected too long
can result in bad debt
. High delinquency rates and poor collection efforts can also negatively impact the association's ability to obtain bank loans
. Lenders look at an association's delinquency history to gauge its ability to repay a loan.
Protect Membership's Interest.
To protect its membership against increased assessments, reduced services, and to preserve the association's ability to borrow, boards must record liens
on delinquent owners and initiate collection actions
Compromise and Waiver
. Boards have the power to establish payment plans
, waive fees, and compromise delinquent assessments owed by members to the association. However, boards need to have good basis for such actions and they need to be in the best interests of the association.
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