Given the challenges presented by today’s economy and housing market, homeowner association (HOA) boards of directors are finding themselves in the increasingly challenging position of having to operate their associations more like a business.
Many HOAs hire management companies to assist with the often-complex duties, laws and issues involved in operating an HOA. For similar reasons, an increasing number of HOA boards nationwide are now hiring collection agencies to help them recoup the unpaid fees owned by distressed and delinquent homeowners.
The downturn of the housing market and the ongoing foreclosure crisis of the past five years or so has been well-publicized nationwide, especially in hard-hit states like Nevada, California, Arizona, Florida and others that housing booms in the previous decade.
But what has received much less attention across the country is the accompanying hardships facing HOAs struggling to stay solvent and provide their homeowners with amenities and services while so many residents are not paying their monthly assessments.
“Many of the HOA boards we talk with have tried everything they can think of to get homeowners to pay their assessments,” said Joel Just, president of Red Rock Financial Services, a collection agency specializing in the unique needs of HOAs. “They send letters, hold hearings, send more letters, and eventually have to take the next step of hiring a collection agency.”
Red Rock Financial Services provides services to HOAs at no cost to the association. This means that the past due assessments that are collected go straight to the association. There are no additional or hidden costs.
“In one year, we helped an HOA in Arizona collect $200,000 in past due assessments,” Just added. “That’s $200,000 that the community was able to use to fully fund its reserve fund and make improvements to the community.”
Red Rock Financial Services works with over 1,000 communities nationwide. The company continues to see an increase in demand for its services as communities struggle with collecting assessments.
“HOAs need to do what they can to operate, and if that means hiring a collection agency, then so be it. They should consider all their options,” Just said.
HOA collection agencies like Red Rock Financial Services are well-versed in HOA regulations and collections laws, he said. They are able to take on the day-to-day activities necessary to recoup the funds owed to the HOA, so the associations themselves don’t have to perform such tasks on their own. This frees up the directors to do what they volunteered to do and focus on effectively overseeing their community.
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