In the tough economic environment we've been struggling through over the past few years, many condo owners have faced job loss, pay cuts, or just financial uncertainty. Unfortunately, the sign of the times sometimes leads to an owner not paying their common charges.
“I definitely say that in the last five years, owners not paying assessments and being delinquent has become a problem,” says Gail Filkowski, CMCA, director of sales and marketing at American Community Management in Schaumburg. “Five years ago, management companies were inundated with requests for paid assessment letters and sales packets. Today we are constantly sending out late notices and records to the attorney for collections. And if you even wanted to go back 5 to 10 years ago, I didn't really see many line items in budgets for bad debt, while today we have to encourage a lot of communities with high delinquencies to budget for an amount that they simply aren't going to get in assessment payments.”
A tough job market may be the biggest reason for late or skipped payments.
“I think that job loss is the most common reason for people to stop paying assessments,” says Filkowski. “They're kind of forced to choose what bills to pay, and assessments are at the bottom of the list after groceries, utilities, and car payments. Also today with so many foreclosures happening, homeowners will frequently just stop paying assessments as well. They think making an assessment payment might be pointless if they're eventually going to lose their home to foreclosure, which is frustrating for a property manager because a lot of homeowners don't quite understand that, actually, the consequences of not paying your assessments can lead to the association obtaining an order of possession, and if they actually want to follow through, evicting that homeowner a lot faster. Then, that homeowner might lose their home in a foreclosure,”
Communication & Consistency
Associations should have a written procedure that is disseminated to everyone so that residents know exactly the way things are done—and more importantly, that things are done consistently for all unit owners.