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Why do I need to pay assessments and what happens if I don’t?

By Farrah Esquer, CCAM, CMCA, AMS, PCAM, President

As a member of a homeowner’s association, also known as a common interest development or community association, you are bound by the Association’s governing documents to pay assessments.  Assessments are established by the Board of Directors to assist the corporation in meeting its budgetary needs.  The Association is required to maintain the common areas such as landscape and pools and fund administrative expenses to meet legal requirements for annual audits and a reserve studies.  Depending on the Association’s governing documents, the Association may also be required to maintain the exterior surfaces of the buildings, and shared plumbing lines.

As a non-profit mutual benefit corporation, the Association depends on assessments from homeowners to meet common needs.  Delay or non-payment of assessments can result in the Association not being able to make payments to their vendors, incurring late charges, and deferring maintenance.  Deferred maintenance can expose the Association and Directors to legal liability for not meeting fiduciary duties.

The Board of Directors must also enforce the Association’s Assessment Collection Policy.  Delinquent homeowners can incur additional fees ranging from late charges to interest fees to collection costs.  Associations may place a lien against a property and can ultimately foreclose on the property or pursue a personal money judgment against the delinquent homeowner.  It is important to be aware that a homeowner may not withhold assessment payments if they feel that the Association has not performed its maintenance duties or any other obligation.  Cardinal recommends that homeowners become familiar with the Association’s Assessment Collection Policy.

If a delinquency occurs, a homeowner may request that the Board of Directors consider a payment plan to resolve the delinquency.  Payment plan requests should be submitted in writing to Cardinal for review by the Board of Directors.

The operations of the Association are solely dependent on assessments paid by the homeowners, and non-payment can result in increased assessments, special assessments, or the inability of the Association to meet its obligations.

 

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