Academy/Starting as a Board Member
Understanding current delinquencies
What the delinquency report is actually telling you, and what to check before the board acts on it.
A delinquency report lists which owners have not paid assessments and for how long. As a new director, check the aged breakdown (30, 60, 90-plus days), the total and percentage of assessments outstanding, whether liens have been filed, and whether the board follows a consistent, written collection policy with notice given before any enforcement action escalates.
Ask for the aged report, not the total
A single dollar figure, "$40,000 delinquent," tells you almost nothing. Ask for the aged breakdown: how much is 30 days late, how much is 60, how much is 90-plus. A large 30-day bucket is often just owners paying late; a large 90-plus bucket is money the association may never see without a lien or legal action. Ask how the total compares to the prior few reporting periods, so you can see whether the trend is improving or getting worse, not just where it sits today.
Also ask whether any of the delinquent balances belong to board members or their close relatives. It happens, and it is worth knowing before you sit in on a collections discussion.
Liens, and why priority is not the same everywhere
Most associations can record a lien against a delinquent owner's property for unpaid assessments. What that lien is worth if the property is later sold or foreclosed depends on where it sits relative to the owner's mortgage. Some states give a portion of an association's assessment lien priority ahead of a first mortgage, sometimes called a "super lien"; whether your state does this, and how much of the balance it covers, is not the same everywhere. Ask the association's attorney or manager whether your state's law gives your association this priority, rather than assuming it based on what you've read about another state.
Before enforcement, due process comes first
A delinquent owner is not automatically fair game for suspension of privileges or escalated collection the moment a payment is missed. In the states this course researched, an association must give the owner written notice, and often an opportunity to be heard, before it may act.
"the association or its agent must give written notice to the owner by certified mail" describing the violation and informing the owner of the right to request a hearing "on or before the 30th day after the date the notice was mailed to the owner."
Source: Texas Property Code, section 209.006, Texas Legislature
"A fine or suspension levied by the board of administration may not be imposed unless the board first provides at least 14 days' notice to the parcel owner... and a hearing before a committee of at least three members appointed by the board who are not officers, directors, or employees of the association."
Source: Florida Statutes, section 720.305, Florida Legislature
The notice period, the hearing requirement, and which actions trigger them vary by state and by your own governing documents. Ask your manager or attorney what your association's process requires before a delinquent account moves to suspension, a lien, or legal referral.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
You're handed a delinquency report that shows one number: total dollars owed. What should you ask for next?
An owner has been delinquent for four months. Before the board suspends the owner's pool access, what needs to happen first?
A director who previously served on another state's board mentions that their old association's lien jumped ahead of the owner's mortgage for part of the unpaid balance. What should your board do with that?
Sources
- Texas Property Code, section 209.006, Texas Legislature
- Florida Statutes, section 720.305, Florida Legislature
Related elsewhere in the Academy
Starting as a Board Member
Next, see how the rest of the financial picture, budget, reserves, and delinquencies together, fits into what a new director should review.
Whether your state gives an association's lien priority over a first mortgage, and what notice or hearing your association must give before suspending an owner's privileges or referring an account to collections, vary by state and by your own governing documents.