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September 1, 2006
Method of Assessment Payments - Who Decides?
Who decides how assessments are paid? Here is a question from a reader:
Can an HOA decide how you pay your dues? Can they require that you use automatic bank deductions? Use a certain bank? Accept only money orders?
Basically, the answer is "yes" to the question as to whether the Board of an HOA can generally decide where assessments are to be sent/deposited and it would probably be reasonable of the HOA Board to require that they be made in some form other than cash. And an Association can get advantages and savings sometimes by working with a certain bank. These options make sense. Many Associations require that payments be sent into a bank directly to be deposited by the bank and the accounting for the deposits is then sent to the manager or Board. The reason for these processes is streamlining in collections and recordkeeping of deposits. This should save the Association money over collection by the bookkeeper or manager, and also serves as a check and balance with regard to control over funds coming in. However, I believe that requiring automatic deductions from personal bank accounts is taking things a bit too far. Not everyone wants an HOA to have access to their bank accounts. This method of payment would assist the association and owner in getting assessments paid on time, but unless the association governing documents said that the Board could require automatic deductions, and even then .... well, I would not recommend it. In California, an owner can request the overnight mail address for mailing payments (which requires a street address rather than a PO box for some overnight services), and can request a receipt and I believe these entitlements, although unnecessarily onerous in most cases, indicate that owners have some rights too.
As for requiring payments to be made by money order, I believe that Boards could require payments in some form other than cash, as there is no way efficiently to deal with cash. But requiring a money order over some other form of payment such as a personal check seems again to me to be taking things too far.
Sometimes I am not given all the facts and this seems it could be such a case. I could understand and would believe a reasonable exception to be a case where an association may demand payment in some form that is guaranteed negotiable such as a money order or cashiers check. If an owner was chronically delinquent in his or her assessment payments and the Board was asked to enter into a payment plan with the owner, it is likely in that case that the Board may require negotiable payments or automatic deductions to be set up so that it did not have to continually deal with the chronic late payment of payments under the agreement so you can see that there are two sides to every question. .
Posted by Beth Grimm at September 1, 2006 9:28 PM