By and large, a board and management company can expect payment from residents for monthly fees to be received on time and in full. These all-important funds keep day-to-day operations moving forward without delay. There are situations, however, that arise which can offset the balance sheet. Circumstances run the gamut but in the end, monies that can’t be collected end up costing a whole lot more than the losses they represent.
There are many reasons residents cite for nonpayment of their monthly dues and assessments: unemployment, other unexpected expenses or sheer forgetfulness. But the most common reason cited is that someone in the family isn’t working because they’re sick, says Marshall Dickler, an attorney with the law firm of Dickler, Kahn, Slowikowski & Zavell, Ltd. in Arlington Heights. Another common reason for arrears is a divorce or separation that leaves a resident short of cash. In the case of elderly residents, isolation and forgetfulness may play a role. In the worst case scenario, a resident may have died without a person appointed (or willing) to handle their estate.
“After that, it usually is something like money management, where the owner has built up debt and can’t juggle or make all of their payments,” Dickler says. “Believe it or not, we see a tremendous amount of this in January and February, after Christmas purchases that can’t be paid for with savings or cash flow.”
Since the economic implosion of 2008, many industry professionals point to unemployment as a major factor in non-payment of fees, assessments and common charges.
It is true that the economy has played a major role in not only late payments but the ability for some people to make their payments at all. This is due, in part, to high jobless rates. For example, according to the Illinois Department of Employment Security (IDES), Chicago's unemployment rate remains near percent, compared to a national rate which, as of March 2012, is at 8.2 percent.