What to do when homeowners don't pay dues
Sooner or later, some owner doesn’t pay. Usually it isn’t defiance: a check got lost, a card on autopay expired, someone lost a job, or an owner is upset about something the board did and is holding back dues to make a point. Whatever the reason, every unpaid dollar is a dollar the other owners cover, so the board has to act. Done well, collections are calm, predictable, and the same for everyone.
This guide walks through the steps, from the first reminder to the last resort. The rules differ a lot from state to state, and your governing documents add their own. This isn’t legal advice: read your declaration and bylaws, and talk to an attorney who works with associations in your state before you file a lien or go to court.
Start with a written collection policy
The most useful thing a board can do happens before anyone is late: adopt a written collection policy and send it to every owner. It should say:
- When dues are due, and when a payment counts as late.
- What late fees and interest apply, within what your documents and state law allow.
- Each step and its timing: reminders, notices, payment plans, liens, referral to an attorney.
- How payments are applied, for example to the oldest charge first.
- Who decides, such as which steps the treasurer takes on their own and which need a board vote.
A policy protects the board as much as the owners. When every late account follows the same steps, nobody can say they were singled out, including the board member’s neighbor who is also behind. Some states require a written policy: Colorado, for one, requires associations to adopt a policy on collecting unpaid assessments.
A sample timeline
Here’s how a policy might lay out the steps for monthly dues of $200 due on the first. Your documents and state law set what you can actually charge and when.
| When | Step |
|---|---|
| Day 1 | Dues are due |
| Day 15 | Friendly reminder by email; the payment is now late |
| Day 30 | Late fee charged; a second notice with a statement of the account |
| Day 60 | A formal letter offering a payment plan, sent the way state law requires |
| Day 90 | Board reviews the account; if there’s no plan, the required pre-lien notice |
| After the notice | Lien recorded, if the owner hasn’t paid or agreed to a plan |
| Months later | Referral to the association’s attorney, by board vote |
The first month: a reminder, not a threat
Before sending anything, check your own records. A payment posted to the wrong unit, or a check sitting in the mail, is an embarrassing reason to chase someone. Then send a short, friendly reminder: what’s owed, how to pay, and who to contact with questions.
Most late accounts end here. Making payment easy helps more than any letter: an online payment link, and autopay for owners who want it, take away the most common reasons dues are late.
Late fees and interest, within the limits
Late fees exist to encourage paying on time, not to raise money. Charge only what your documents allow, and check your state’s limits, which can be lower. Two examples:
- California: an assessment is delinquent 15 days after it’s due. The late charge can’t be more than 10 percent of the delinquent assessment or $10, whichever is greater, and interest can’t exceed 12 percent a year, starting 30 days after the due date.
- Florida (homeowners’ associations under chapter 720): a late fee, if the documents allow one, can’t be more than $25 or 5 percent of the late installment, whichever is greater. Payments are applied first to interest, then late fees, then collection costs and attorney’s fees, and last to the assessment itself.
If the board waives a fee, record why, and be ready to waive it for the next owner in the same situation.
Offer a payment plan
An owner who has fallen behind by several months often can’t pay it all at once, but can pay something every month. A payment plan gets the association paid and keeps the account out of court. Put it in writing: the amount and date of each payment, that new dues must be paid on time too, and what happens if a payment is missed.
Some states make payment plans part of the process:
- Texas requires associations with more than 14 lots to adopt payment plan guidelines. A plan must be at least three months long, and the association doesn’t have to offer one longer than 18 months, or to an owner who broke a plan in the last two years.
- California lets an owner who gets a pre-lien notice ask, in writing within 15 days, to meet with the board about a payment plan. The board must meet within 45 days of the request.
Liens
In most states the association has a lien on each home for its unpaid assessments, from state law, the declaration, or both. Recording a notice of the lien in the county records means a sale or refinance can’t close without paying the association. That’s often how a long-unpaid account finally gets paid.
States set notice requirements before a lien is recorded, and getting them wrong can void the lien. For example:
- California requires a notice by certified mail at least 30 days before recording. It must include an itemized statement of what’s owed and explain the owner’s right to dispute the debt and to meet with the board.
- Florida requires a written demand, by certified or registered mail and first-class mail, giving the owner 45 days to pay before the association records a claim of lien.
In some states, part of the lien, usually up to six months of assessments, even comes ahead of the first mortgage. In others it comes after it. Liens don’t last forever either: under the uniform act many states follow, a lien generally ends unless the association starts enforcing it within three years. Don’t let an account sit for years without a decision.
Bringing in a collection agency or attorney
When letters and plans haven’t worked, the board may turn the account over to a collection agency or the association’s attorney. Two things to know:
- Federal debt collection law likely applies to them. The association collecting its own dues generally isn’t a “debt collector” under the federal Fair Debt Collection Practices Act. But courts have held that HOA assessments are consumer debts, so an agency or law firm that regularly collects them for associations has to follow its rules.
- Check who pays. Many declarations let the association recover reasonable collection costs and attorney’s fees from the owner, but some states limit this. Texas, for one, requires a certified-mail notice giving the owner 45 days to pay before the association can charge them for a collection agent’s fees.
Ask any agency or firm how they treat owners before you hire them. They’re writing to your neighbors on the association’s behalf.
Court, and foreclosure as the last resort
For a modest balance, small claims court can be a quick way to get a judgment, within your state’s dollar limit. Before a court enters a judgment against an owner who doesn’t appear, federal law requires a statement about whether they’re in the military.
Many states let an association foreclose its lien, but foreclosure is expensive, slow, and costs a neighbor their home, and many states restrict it. California, for example, doesn’t allow foreclosure for unpaid assessments under $1,800, not counting late fees, interest, and collection costs, unless they’re more than 12 months overdue. Colorado doesn’t allow foreclosure for unpaid fines alone. A board considering foreclosure needs its attorney, a vote, and a clear record that every earlier step was followed.
When an owner files for bankruptcy
Once you learn an owner has filed for bankruptcy, stop all collection on what they owed before filing: no letters, calls, or new liens. This is the automatic stay, and the association’s attorney should handle the claim from here.
Dues that come due after the filing are different. Under federal bankruptcy law, they generally aren’t wiped out by the discharge for as long as the owner still holds title to the home. Keep billing them, but ask the attorney how to collect while the case is open.
What not to do
- Don’t shame owners. Posting names of late owners, or discussing them at an open meeting, rarely gets anyone to pay and can create legal trouble.
- Don’t cut off what owners need to live in their homes. Suspending use of amenities like the pool may be allowed, but only if your documents and state law permit it, usually after notice and a chance to be heard.
- Don’t make side deals. A quiet arrangement with one owner becomes the expected treatment for every owner.
- Don’t let it drift. Every month an account goes unhandled, the balance grows and the association’s options can shrink.
Keep good records
Collections depend on records. For every late account, keep:
- A ledger showing every charge and payment, and how each payment was applied.
- Every notice: what was sent, when, and how, with certified mail receipts.
- Every agreement: payment plans, signed and dated.
- Board decisions in the minutes: liens, referrals, waivers, and the reason for each.
If the account ends up in front of a judge, these records are the association’s case. For the rest of the treasurer’s year, see the HOA treasurer duties checklist.