What happens if someone doesn’t pay their community fees?
In different communities, the fees are payable at different intervals – they can be due monthly, quarterly or even annually in some cases- all depending on what is contained in the individual community rules.
Most people pay regularly by direct debit which is often the easiest method as once the direct debit mandate is in place, the administrators can collect the amounts due without any unnecessary delay and with minimal bother to the home owner.
Often there are surcharges and interest payable if payments are made late, again depending on the individual community’s rules and regulations. Having a direct debit set up also avoids this problem.
But what happens when the payments still aren’t made after the due date? What effect will this have on the Community as a whole?
In order for the Community to operate efficiently and smoothly, all income needs to be collected during the financial year as often communities are operating to very tight budgets in order to keep costs down for the individual owners.
If you should find yourself in temporary financial difficulty you should make sure that you communicate this to the administrator as soon as possible. Do not just ignore the problem hoping that it will go away as it will only get worse – the community fees will continue to accrue along with any interest and surcharges which may be applicable. The administrator’s collection department will be able to advise you on the best course of action. It is essential that you also advise them of any change in personal details so that the communication channels between you do not break down.
We as administrators have very strict collection policies as we have seen first-hand the detrimental effect that non-payment of community fees over a long period of time by a significant number of individuals can cause. It doesn’t only result in a lack of funding to keep the community properly maintained, it can cause ill-feeling between the fellow owners – after all, if they are paying their fees so that they can enjoy the amenities then why should others be allowed to enjoy them if they fail to pay?
Many communities try to avoid this problem by creating ways in which the annual use of the amenities can be monitored and only allowing those people up to date with their payments access to these. This is relatively easy to maintain with access to things such as swimming pools and gymnasiums, where entrance is controlled, but more difficult in terms of things like gardens etc. Obviously your administrator will know what the Community’s statutes allow to be restricted in this way for non-payers.
Controlling the collection of monies and bad debts is a key area and one which your administrator should give priority to.
If the non-payment is of a more permanent nature and amounts are still outstanding by the time the AGM is held, those owners with debts will not be able to vote at the meeting. The treatment of these amounts will be discussed at the meeting and whether legal action is to be taken for their recovery or not is also approved.
We will talk in more detail another time about the legal recovery of debts process and what it entails.