Boards may want to consider getting ahead of potential questions when owners see “Bad Debt” on financial reports. Informing owners about other owner’s delinquencies can be a delicate matter. Here are some steps to properly inform the association members:
Before informing the community
Before informing the community, make sure to gather accurate information regarding the delinquencies. This includes the amount owed, the duration of the delinquencies, and any other relevant details. Be sure NOT to include any information that will enable anyone to identify who the delinquent owners are.
Consult your association’s attorney regarding what is recommended and appropriate as far as communicating this information to owners.
- Explain how delinquencies affect the financial health of the association, including the association’s ability to procure insurance and loans.
- Explain how the association addresses delinquencies. It is a best practice to have clear collection procedures or a “Collections Policy”, which may include payment plans and other strategies.
- Explain common obstacles associations face in collecting some delinquencies. This will help build trust and confidence in how delinquencies are being handled.
It is important to approach informing owners about delinquencies with sensitivity and transparency. By providing clear information and showing the association is following best practices and proper procedures, you can lessen the confusion surrounding the existence of delinquencies in your community.
– Raymond Dickey
Important: I’m summarizing from my perspective and not offering any form of professional advice. Always seek your own professional advice from licensed professionals.