Empowering HOAs: Transitioning to a Collection Company from the Attorney

Homeowners Associations (HOAs) play a vital role in maintaining the integrity and value of communities. One of the most critical tasks they face is ensuring timely collection of assessments from homeowners to fund community services and amenities. Traditionally, many HOAs have relied on attorneys to recover delinquent assessments through legal means. However, an increasing number of associations are exploring alternative, cost-effective solutions by engaging collection companies to handle the task. This article delves into the benefits of transitioning away from attorneys and leveraging collection companies for delinquent assessment recovery.

Understanding the Challenges with Attorney Representation

HOAs have often sought legal counsel to recover delinquent assessments, mainly because of their expertise in navigating the complex legal landscape surrounding collection practices. However, the traditional attorney-driven approach comes with some inherent challenges:

High Costs: Engaging attorneys can be expensive due to their hourly rates and associated legal fees, potentially impacting the association’s financial health.

Lengthy Processes: Legal procedures can be time-consuming, prolonging the resolution of delinquent accounts and straining HOA resources.

Impersonal Communications: Has the attorney made any outbound calls to the debtor to attempt to resolve the matter outside the legal system, or are they simply sending the required notices by mail before initiating foreclosure or a lawsuit?

Strained Community Relations: Homeowners may perceive an adversarial relationship with their association when attorneys get involved, negatively impacting community harmony. After all, the attorney is not trying to settle the debt but rather foreclose on your home. 

The Advantages of Collection Companies

Transitioning to collection companies offers numerous advantages that can significantly benefit HOAs and their communities:

Cost-effectiveness: Collection companies usually operate on a merit basis, meaning they charge collection costs (much less expensive than attorney costs) to the delinquent owner. 

Specialized Expertise: These companies specialize in debt recovery, possessing extensive experience and knowledge of the collections process, ensuring a more efficient and effective approach.

Enhanced Efficiency: Collection companies employ advanced technology and streamlined processes to expedite recovery, reducing the time required to collect delinquent assessments.

Preservation of Community Harmony:, HOAs can maintain a positive relationship with homeowners by avoiding the confrontational image associated with attorneys, fostering a sense of cooperation and understanding.

Finding the Right Collection Company

Choosing the right collection company is crucial to ensure a successful transition. HOAs should consider the following factors:

Reputation and Experience: Research the collection company’s track record, experience in dealing with HOAs, and their success rate in recovering delinquent assessments.

Compliance and Ethical Practices: Ensure the collection company adheres to all relevant laws and regulations governing debt collection, treating homeowners respectfully and fairly.

Transparent Fee Structure: Understand the company’s fee arrangement and ensure it aligns with the association’s financial goals.

Communication and Reporting: Look for a company that emphasizes clear and frequent communication, providing regular updates on collection efforts and results.

Establishing a Smooth Transition Process

Transitioning away from attorneys and implementing a collection company for delinquent assessment recovery requires careful planning. Here are some tips to make the transition as seamless as possible:

Conduct Board Meetings: Educate the HOA board and homeowners about the benefits of the transition and address any concerns or questions they may have.

Review Legal Contracts: Conduct a thorough review of the collection company’s agreement. If you want an unbiased opinion, have an attorney without an interest in the agreement conduct the review. If you have your general counsel, who usually handles the HOA’s collection needs, review the contract, they will object. Not because the agreement is not legally sound but because of their self-interest in retaining that business. Have a disinterested attorney review your agreement.

Consider a Change of Tactic: Remember, just because your attorney has recorded a lien on the property does not mean that you need to continue to litigation and foreclosure. You can move the file over to a collection solution specializing in working with delinquent HOA members. 

Collaborate with the Collection Company: Work closely with the selected collection company to share relevant documentation and provide necessary information to enhance their success.

Transitioning from attorneys to collection companies for delinquent assessment recovery is a proactive way for HOAs to achieve more financial stability, operational efficiency, and harmonious community relations. By partnering with reputable collection companies, HOAs can focus on enhancing the overall living experience for homeowners while effectively managing their finances and preserving the value of the community they serve.

For a free analysis to discover how Axela Technologies can help you improve your bottom line, contact us so we can show you “How the Future Collects.”

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