Most professionals in both the property management and bill-collection business agree: serious payment arrears don't happen all that often in HOAs, but when they do, it isn't pretty. Unpaid fees are more than just a hassle; they're a time-drain for managers and their administrative staff, they negatively impact the association's financial profile, and they can cause a lot of bad blood between residents, boards, and management.
Nowhere to Hide
"It's not like the dentist," says Vincent Gaudio of Collex, Inc. in Long Valley, a collections agency that serves HOAs and managers. "If you have a $200 outstanding bill at the dentist and you get a toothache tomorrow, you'll just go to a different dentist and avoid that other bill. With residents, it's different from usual collections because the people are actually living there."
Indeed, there are few places for delinquent condo residents to hide—everyone has to come home eventually. A person might be able to slink around in a huge building, but in a smaller community, it's hard to come or go unnoticed. And, as Gaudio points out, there are many bills people will avoid paying before they'll compromise their living situation—it's usually the last to go unpaid.
"The occurrence of bad debt or bad money in this industry is relatively low, as opposed to the retail industry, for example," says Gaudio. "Again, this is because you're dealing with the place where people live. The medical industry or the auto industry deals with debt a lot more. The occurrence of bad debt in the co-op and condo industry is the lowest in any industry."
While that's encouraging news, it would be naïve to think everyone pays mortgage payments and maintenance fees perfectly on time, all the time. There's always a reason why the money's not coming—some reasons are just better than others and are delivered in a responsible way. Steve Misetic, a property manager in Chicago, says that the reasons people cite for late or missing maintenance or common charge payments are what you'd expect.