How Do You Cut the Costs of H.O.A. Expenses?

Published January 1, 2010

by JoAnn Smith Heckman, R.R.P.
President/C.E.O.
Collections Unlimited, Inc.

Since this is a question every Board of Directors seems to be asking, I’m sure the title of this article got your attention. The economy has injured our industry and placed a large burden on those owners that faithfully pay their annual assessments. What can you do?

The first option is contracting a professional collection agency to help. There are specialty agencies that offer many services to cut your costs and increase your bottom line.

Ask yourselves this… how many owners do you have that are “lost” with no current address available? The delinquencies for these owners just continue to increase. Collection agencies can offer skip trace services prior to placing the accounts in cllection for a nominal fee.
What does it cost your H.O.A. to send the monthly or quarterly newsletter? There are companies that will prepare your newsletter and pay for your postage in exchange for an advertisement in your publication. Think of the time, employee hours and cost savings your Association would gain just by allowing advertising.

Does your H.O.A. have an older owner base that is no longer in a position to continue using the timeshare for either health or monetary reasons? Agencies can provide a deed back service whereby either the owner pays the fees for the transfer of title to the Association or the H.O.A. pays a nominal fee. There are many options available. This cleans up your receivables and in most cases, provides extra income and a Deed to the H.O.A. In return that property can be resold to an assessment paying owner.

How old or aged are your delinquent accounts? That’s money just sitting in a filing cabinet. Its time to set up a formal Billing and Collection Policy. A professional collection agency will provide the information you’ll need, and most agencies specializing in timeshare collections have the ability to cite the required State Laws in this regard.

Don’t be confused… there is a vast difference between a collection agency and a professional timeshare collection agency. If you’re using an agency now or are in the market for a collection agency, there are many questions you should ask. A timeshare agency will be knowledgeable about fixed and floating time, points systems and fractionals. They’ll also know the difference between an internal exchange and an outside exchange company. Their collection agents will be able to explain exchanges to your owners, since this is one of the most common reasons owners do not pay their assessments. They do not understand exchanges and they are therefore unhappy with the product. A timeshare agency can explain maintenance fees and the costs in the budget that make up the maintenance fees, real estate taxes, reserve accounts and special assessments to your delinquent owners.

Does your H.O.A. have an internal collection department? What are the overhead costs of this department annually? A professional agency takes care of the costs of notices, telephone calls and skip tracing of accounts placed in collection. You also realize savings in the cost of utilities, employee salaries and commissions. Could outsourcing save your H.O.A. considerable costs resulting in a decrease in annual fees for your owners?

It is the fiduciary responsibility of each Board Member to provide the best service possible for your owners while keeping costs as low as possible. Think about the monies that could be saved.