Springs CCR: Late Payment of HOA Assessments (Delinquencies) – Part 1
 

QUESTION: My spouse was recently laid off from work, and we’re concerned that we won’t be able to pay our HOA assessment that will be due on July 1st and late on July 31st.  If we’re unable to make that payment, what collection actions occur and when?


ANSWER: As a result of the Texas state legislature law adopted in 2011, there are two paths of action that may result from the non-payment of HOA assessments, as described in CCR ARTICLE XXXV, COVENANTS FOR MAINTENANCE ASSESSMENTS.  While that article should be read in its entirety so that all of the provisions for collecting HOA assessments not paid within 30 days of the due date are known and understood, the following summarizes the collection actions and fees that result from non-payment of an assessment:

 

For both paths of actions resulting from non-payment, the following will occur:

 

  •      o HOA assessments are currently due on January 1st and July 1st of each year
  •      o HOA assessment payments are late on January 31st and July 31st, respectively
  •      o The Association Manager will have a Payment Plan generated for each property whose assessment is not paid by January 31st or July 31st.   The owner will be charged sixty dollars ($60) by the Management company to defray the cost associated with the Payment Plan’s generation, mailing, and processing
  •      o The owner will be charged a late fee of twenty-five dollars ($25), effective on the first day that the assessment is late (January 31st/July 31st).   That fee is collected by the HOA in accordance with the Reasonable Late Fees section of Article XXXV.
  •      o The owner will be charged interest on the unpaid assessment at a rate of twelve per cent (12%) per annum, and begins accruing on the due date (not the “Late On” date).   This interest accrues until the delinquent assessment has been paid in full, regardless of which path of collection action is taken

Path 1 – Payment Plan:

  •      o Owners are entitled to make partial payments for delinquent amounts owed to the HOA under a Payment Plan.
  •      o Late fees, penalties, and delinquent collection-related fees will not be added to the delinquent amount while the Payment Plan is active.
  •      o The Management Company will impose a fee for administering a Payment Plan in each month that the plan is active; in 2014 that fee is twenty dollars ($20), and will be listed on the Payment Plan form.
  •      o All Payment Plans will be in writing on a form provided by the HOA/Management Company, and signed by the owner.
  •      o The Payment Plan becomes effective and is designated “active” upon (1) receipt of the fully completed and signed Payment Plan form, (2) receipt of the first payment under the plan, and (3) acceptance by the HOA.
  •      o A Payment Plan may be no shorter than three (3) months and as long as eighteen (18) months, based on the total balance of the delinquent amount.
  •      o A Payment Plan must include sequential monthly payments.  The total of all proposed payments must equal the current balance + Payment Plan administrative fees + the estimated accrued interest and late charge(s).
  •      o If an owner requests a Payment Plan that will extend into the next assessment cycle, the owner will be required to pay future assessments by their respective due date, in addition to the payments specified in the Payment Plan.
  •      o The Payment Plan will be voided if an owner defaults on the terms of the Payment Plan.  The Payment Plan is considered a default if (1) the owner fails to return a signed Payment Plan form with the initial payment, (2) misses a payment due in a calendar month, (3) makes a payment for less than the agree upon amount, or (4) fails to pay a future assessment by the due date in a Payment Plan which spans additional assessment cycles.
  •      o The HOA will provide written notice to the owner that the Payment Plan has been voided.
  •      o If a Payment Plan is voided, the full amount due by the owner will immediately become due.  The provisions and associated fees for Path 2 – No Payment Plan are implemented if the full amount is not immediately paid.

Example:

 

 

 

Owner ABC fails to pay their $360.00 HOA assessment due on July 1st by July 30th.  Non-payment results in the following, assuming total amount due is paid by the end of the 4th month following the “Late On ___” date, in accordance with an active 3-month Payment Plan:  

                    

   $ 25   HOA late fee on July 31st

        4   Approx interest charge on $360 principal, 12% rate - July

      60   Management Co for Payment Plan generation - August

      20   Management Co Payment Plan management – August

        4   Approx interest charge on $360 principal, 12% rate - August

      90   Owner payment – August (1 of 4 payments)

      20   Management Co Payment Plan management – September

        4   Approx interest charge on $360 principal, 12% rate - September

      90   Owner payment – September (2 of 4 payments)

      20   Management Co Payment Plan management – October

        4   Approx interest charge on $360 principal, 12% rate - October

      90   Owner payment – October (3 of 4 payments)

      20   Management Co Payment Plan management - November

        4   Approx interest charge on $360 principal, 12% rate - November

      90   Owner payment – November (4 of 4 payments)

   $545   Total payment due if paid on October 31st  

 

 

   Path 2 – No Payment Plan:  See Springs CCR: Late Payment of HOA Assessments (Delinquencies) – Part 2 in the Discussion Section


These monthly “Test Your Knowledge” CCR messages intend to remind residents of The Springs of the Covenants, Conditions, and Restrictions (CCR’s) that apply to all Springs residents solely by our election to live in this community. The purpose of the CCR’s is to maintain specific standards for the good of us all, as articulated in their definition:

“THE SPRINGS AT STONE OAK is encumbered by these Restrictive Covenants for the following reasons: to seek to achieve the best and highest use and most appropriate development of the property; to protect lot owners against improper use of surrounding lots; to preserve so far as practical the natural beauty of the property; to guard against the erection of poorly designed or proportioned structures of improper or unsuitable materials; to encourage and secure the erection of attractive improvements on each lot with appropriate locations; and to secure and maintain proper setbacks from streets and adequate free space.”

If you are a Springs resident who has misplaced your copy of the CCR’s, or are a new resident who wasn’t provided a copy by the previous owners or your realtor, you can view (and download in Adobe Reader [.pdf] format) the complete Springs CCR’s and By-Laws at the Consolidated Bylaws and CCRs section of this website, located in the Pages & Links tab.