CONSIDERATIONS FOR COLLECTIONS

Assessment collection is the life blood of any community association. From the smallest 20 lot subdivision to a large 500 unit condominium community, the prompt collection of assessments is essential for community operation.
The collection of assessments is a basic, legal obligation of the association. The governing documents of a community detail the owner's obligation to pay assessments and the association's duty to establish a proper budget and to collect assessments in furtherance of the budget. In fulfilling the duties of the association, the Board has a legal responsibility to impose and collect the assessments.

Some governing documents are very explicit pertaining to the fiduciary duty to collect assessments while others make a general reference to the association's duty. The governing Florida law, whether a Condominium community governed by Chapter 718, or a Co-operative governed by Chapter 719, or a Homeowners Association which is governed by the general parameters of Chapter 720, outline specific responsibilities.

The procedure for adopting assessments is relatively simple; however, many associations overly complicate the process. The Board should adopt a realistic annual budget. In order to carry out the budget, the Board needs to set assessments and determine the due dates for same. In condominiums, the assessments can be due no less than quarterly. Homeowner associations establish due dates for assessments at the discretion of the Board (limited by the documents) and same may be due annually, semi-annually, quarterly or monthly.

After the association has adopted the annual budget, notice of the assessment amount and the due date(s) need to be given to the owners. Some associations provide pre-printed coupons, while others advise owners by a letter from the Board as to the assessment amount and date(s) due. The Board should also bide by any specific notice requirements which may be contained in a community's governing documents.

Special assessments are an exception to the norm. Special assessments are for expenses which were not contemplated when preparing an annual budget. A Board may have the authority to impose a special assessment on its own initiative or in many communities the concurrence of a certain percentage of the owners is required. Many older Homeowner Associations contain a provision which limits the amount the Board may increase the budget over the prior year and also contain a requirement that the membership approve any special assessment. This situation leads to financial problems and the documents should be appropriately amended.

In adopting any special assessments, extreme caution should be undertaken to ensure that any specific notice requirements of the documents and the applicable Statutes are met. For example, the Condominium Act requires a 14-day notice of a Board meeting, to all owners when special assessments are to be adopted. The notice must be specific, reciting that the Board will consider a special assessment and detail the purposes of the proposed special assessment. If an assessment is not properly adopted, a Court may refuse to enforce collection.

The association may wish to consider a policy for past due assessments. A policy may recite that if an assessment is more than ten (10) days past due, the association will send a friendly reminder letter. If the assessment remains past due for another thirty (30) days, the association may send a firm letter threatening to turn the matter over to the association attorney.

When an association delays on collecting past due assessments, it may jeopardize the Association's right to receive past due funds. Board members must remember that all owners must make up any shortfall in assessments.

Timely collection of assessments is important to an association. Therefore, once an assessment is more than sixty (60) to ninety (90) days past due, the matter should be turned over to the association attorney. The Board may direct the attorney to promptly file a Claim of Lien.

In collecting past due assessments, the association must treat all owners the same and follow the adopted policy. Based upon the fiduciary duty to all owners and the duty to collect, a Board should not waive or compromise past due assessments.
In summary, collection of assessments is essential for a community association. It is the Board's duty to fairly collect assessments from all owners. As with most Association matters, good communication from the Board to the members leads to fewer problems and misunderstandings. When owners are aware of the purpose of assessments, the amount and when assessments are due, there will be fewer delinquencies. When the Board establishes a policy of open communication, and a fair collection policy for past due assessments, the decision to proceed against an owner on a past due account will be less personal for all involved. Your association attorney can assist with assessment procedures and collections.