During the board meeting, the property manager holds up a stack of bills and asks the board which vendors should be paid and which will have to wait. It’s an all too common event that is played out during condo and HOA meetings throughout the United States. At each meeting the decisions get harder and harder to make.  Eventually, the choice is often made to go back to the well and drop another special assessment into the laps of the condominium owners who pay on time.

It’s still possible that community associations can reduce expenses but that strategy is limited because there is not much meat left on that bone. We are three years into this crisis.  Reserves have been depleted and all but essential services have been cut back. Delinquencies and defaults are the villains, but it is the service providers and responsible owners who are being punished. What most associations and their boards of directors do not realize is that the problems of cash shortfalls and bad debt be solved by establishing structured and intelligent collections policies and procedures and enforcing them. It is the most effective way to bring in errant dollars.

The first and perhaps most important step in this process is realizing that condominium associations and HOA is just like any business and that cash losses and delinquent accounts cannot be tolerated. The second step is determining which debts can be collected and which debts are stone cold dead. And finally, using all available resources to recover what can be collected and making a policy that establishes consequences to prevent future delinquencies.

Many boards are surprised to learn that most of what is owed and considered “bad debt” is actually collectible. When an owner has their home foreclosed upon, the debt they owe the association is by no means erased. When a bank forecloses on a unit that is in a non-equity position (sometimes called being upside down or underwater), somebody needs to fight tooth and nail on behalf of the homeowner association to collect it.

If your condominium or HOA is like any other business, when faced with defaulting or slow paying accounts, you would bring in professionals to collect for you.  To send an account directly to an attorney is premature and perhaps not the most cost effective method of collection. There is an art and science to professional collections work.

There is a myth among motivational speakers that the Chinese word “weiji” means both opportunity and crisis. While this is not quite true regarding the Chinese language, it is certainly true regarding good old fashioned American business innovation.  Where there is a demand you can be sure that American business will find a way to satisfy it. A cottage industry has been born out of this housing and foreclosure crisis that brings funding and other innovative financial solutions to community associations. With almost 20% of Americans living in common interest residential associations, one would almost expect that new businesses would evolve out of sheer necessity, and such has been the case. Community associations need to seek out collection services and specialty finance lenders to help them through this crisis. Open up any community association trade publication, find an industry specific collection company and let business take care of business.

Thanks to Kenneth M. Arnold for this valuable information. He is Co-Founder and Chief Executive Officer of Association Financial Services, a Miami, Florida-based company specializing in debt collections, specialty lending and other financial solutions for condominium and homeowner associations. He is also a licensed Florida Community Association Manager and Licensed Florida Mortgage Broker. Feel free to contact Mitch Drimmer with any questions 1-866-736-3069, #804 or mdrimmer@associationfs.com


  1. Thanks for some good basic advice. I have never been a property manager or Board member who spends money before it’s known how it’s going to be paid for. The property manager example in your opening paragraph is not in touch with the Board or a budget. “Manager” infers “managing” — throwing chips in the air and hoping they fall in the right place is not management.

  2. You are absolutelty right, Wolf. Community’s board members change and a new education process starts all over again. A strong CAM brings experience, consistency and professionalism to the table.

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