For most people, a price is paid every month to maintain shelter whether for a house or an apartment.  Some people pay rent for a residence and some people live in community associations (condos or HOAs). You either pay a landlord rent, or you pay the costs for owning your property (mortgage, maintenance fees, taxes, and insurance). No, Rent Is Not the Same as HOA Assessments.

The question today is how this money is applied and how important it is to pay for your housing.

Should You Pay Your Rent?

Not paying rent is hurtful to landlords who have invested in the purchase of a property and maintain it so that they can rent out units. Included in the rent that you pay is a return on investment which the landlord investor most certainly deserves. The landlord takes a risk, works hard, and in most cases is willing to gain a small percentage every month for this investment.

Rent SHOULD be paid.

Should You Pay Condo/HOA Fees?

Community associations are a different story. Condos and HOAs did not sell you this property but rather the home was purchased from a developer or a previous owner. Now these previous owners are gone and it’s your responsibility to pay your share to keep the community in good shape.

The association itself is a not-for-profit entity that has no cushion for delinquencies. HOA delinquencies and Condo Delinquencies put the entire property at risk. Unless a community association collects every dollar that it has budgeted there will be a shortfall and somebody will not get paid.

That somebody could be the janitorial staff, security, landscape, water, electricity or any expense that is due as a result of maintaining the community. Depending on who is in charge of facility maintenance it could even be a life safety issue that is being postponed and that is a dangerous situation.

Maintenance fees MUST be paid.

Every Homeowner Is A Shareholder in the Community

Not paying your maintenance fees is putting your community and yourself in harm’s way. It will decrease the value of your property and may cause small problems to evolve into bigger ones. In a rental, a landlord will do what is necessary to protect their investment, in a condo or HOA every owner needs to do the same.

These are hard times and they may even get harder, so we all need to tighten our belts, hunker down, and pay our community association maintenance fees.

You now need to prioritize your personal accounts payable and your association dues should be on top of that pile. And, once again, I say: Rent Is Not the Same as HOA Assessments.

What Happens If You Don’t Pay Your Assessments?

If you do not pay your association fees and become a delinquent member of your association, the community needs to act. If you do not act to address HOA delinquencies and condo delinquencies, services will be reduced, fees may go up for the good-paying owners, and of course, you may get hit with a special assessment.

It’s no secret that these are hard times but your board of directors has a fiduciary duty to the association and cannot afford to make allowances that they cannot pay for. Principal collected by way of assessments cannot be waived by the board of directors unless they convene a new budget meeting and formulate a budget that contemplates the percentage of delinquencies that are anticipated to appear. Only then is it reasonable to reduce maintenance fees.

The problem is that most community associations already run on very lean budgets and there isn’t much that can be cut.

What Recourse Do Board and Managers Have if Assessments Aren’t Paid?

What can be done is to collect from delinquent owners what is owed. The object of community association collections should NOT be the abuse of foreclosure powers but a way to gently and respectfully engage owners to explain to them the significance of what their fees pay for.

If your management company cannot convey the concept to the owners perhaps a specialized collections firm can. Sending your neighbors directly to an attorney to foreclose on their unit is a very harsh and drastic course of action. Working with them to understand the nature of their obligation and how fees paid benefit themselves and their neighbors is the way to go. Rent Is Not the Same as HOA Assessments.

Find a merit-based collection solution that specializes in community association collections and let them work out your cash-flow problems. Time is of the essence and your community cannot afford to be neglected.

One Reply to “Rent Is Not the Same as HOA Assessments”

  1. Mitch – timely and well said. Association budgets are a “zero sum” game. As non-profits, the money is collected from the owners only to be spent running the association. The association is damaged if it doesn’t have the income stream necessary to operate.

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