As board members and developers, we understand that discussing money — specifically, collecting it — can be the most uncomfortable part of the job. No one wants to be the “bad guy” chasing down a neighbor for a check. Yet, the financial health of the association depends on a consistent revenue stream. This is where a robust, transparent, and legally sound strategy comes into play.

In this guide, we will explore the critical elements of an HOA Collection Policy, why it serves as the backbone of your community’s financial stability, and how partnering with the right management team can transform a contentious process into a streamlined operation.

What is an HOA Collection Policy?


At its core, an HOA Collection Policy is a formal, written resolution adopted by the Board of Directors that outlines the specific procedures for collecting HOA dues. Think of it as the “Rule of Law” for your community’s finances. Instead of making ad-hoc decisions every time a payment is missed — which can lead to accusations of bias or discrimination — the policy provides a predictable, automated roadmap for how delinquencies are handled.

This document serves two distinct purposes. First, it educates homeowners on their obligations and the consequences of non-payment. Second, it provides the Board and the management team with a clear set of instructions to follow without needing to debate the merits of every individual case. It removes the emotion from the equation, turning HOA collections into a business process rather than a personal confrontation.

Why It’s Important to Have an HOA Collections Policy

The importance of a defined policy cannot be overstated, particularly in regulated states like Texas and Colorado, where homeowner rights and association powers are strictly balanced by law. Without a policy, an association is vulnerable to financial instability and legal liability.

Ensuring Financial Continuity


Your annual budget is built on the assumption that 100% of the revenue will be collected. When households stop paying, that revenue shrinks, but the expenses — landscaping, insurance, utilities — do not. If you do not know how to collect HOA dues efficiently, the board is forced to make difficult choices: defer maintenance (which lowers property values), cut services, or unfairly raise assessments on the paying members to cover the shortfall. A strong policy minimizes these gaps.

Legal Protection and Uniformity


One of the fastest ways to land an HOA in court is inconsistent enforcement. If the board allows the Board President’s friend to slide on payments for six months but sends a demand letter to another resident after 30 days, you have a discrimination suit waiting to happen. A uniform policy guarantees that every resident is treated exactly the same, protecting the association from claims of arbitrary or capricious enforcement.

Compliance with State Statutes


Both Texas and Colorado have specific laws regarding the collection process. For instance, the Texas Property Code requires specific notices regarding certified mail and opportunities to cure before certain actions can be taken. A formal policy guarantees that these legal steps are baked into your process, so you never accidentally violate state law while trying to recover funds.

What Should Be In Your HOA Collection Policy


Creating a policy is not about writing a wish list; it is about drafting a strict procedural timeline. When we assist boards in drafting these documents, we recommend including specific, step-by-step instructions that leave no room for ambiguity. Here are the essential components.

1. Due Dates and the Definition of “Delinquency”

The policy must clearly state when assessments are due (e.g., “the 1st of every month”) and exactly when they are considered late (e.g., “any payment not received by the 15th”). This eliminates the “I thought I had until the end of the month” excuse.

2. Late Fees and Interest


Financial penalties act as a deterrent. The policy should specify the amount of the late fee and whether interest will accrue on the unpaid balance. Crucially, these amounts must be reasonable and adhere to state caps. For example, charging a $500 late fee on a $50 assessment would likely be struck down by a court.

3. The Notification Timeline


This is the heart of the policy. It dictates how to collect delinquent HOA dues through a series of escalating communications. A standard timeline might look like this:

4. Payment Plan Options


In many jurisdictions, including Texas and Colorado, HOAs are legally required to offer reasonable payment plans to owners struggling with financial hardship. Your policy should outline the guidelines for these plans: minimum terms, down payment requirements, and what constitutes a default on the plan. This shows the community that while the board must collect funds, we are also compassionate toward neighbors in distress.

5. Application of Payments


When a check finally arrives, how is it applied? Does it pay off the late fees first, or the principal assessment? Most policies (and state laws) dictate a specific order—typically covering interest, legal fees, and late fees before attacking the principal assessment. Clarifying this prevents homeowners from thinking they are “current” when they still owe administrative costs.

6. Restriction of Privileges


Can a delinquent owner still use the gym or reserve the clubhouse? Often, the answer is no. Your policy should explicitly state that amenity access is suspended until the account is brought current. This non-monetary consequence is often highly effective in motivating payment.

7. Escalation to Legal or Collection Agencies


The policy must define the “point of no return”—the moment when the board stops trying to collect internally and hands the file over to an HOA collection agency or attorney. This usually involves filing a lien against the property. By automating this trigger (e.g., “All accounts over $500 and 90 days past due are automatically forwarded”), the board removes the burden of deciding who gets sued and who doesn’t.

Communicate Your HOA Collections Policy


A policy stored in a binder that no one reads is useless. For the rules to be effective, they must be communicated clearly and frequently. Transparency builds trust. When homeowners understand the “why” and “how” behind collections, they are less likely to view the board as an adversary.

Welcome Packets and Portals


Every new homeowner should receive a copy of the collection policy in their welcome packet. Furthermore, it should be permanently accessible on the community web portal. If a resident loses their job or faces a medical emergency, they should be able to look up the policy and see that payment plans are available before they simply stop paying out of fear.

Annual Reminders


We recommend sending a copy of the policy — or a summary of it — along with the annual budget mailer. Sending an annual reminder for HOA Fees serves as a “reset,” reminding everyone of the expectations for the coming fiscal year.

Clear Invoicing


If you want to know how to collect HOA dues effectively, make it easy to pay. Invoices should clearly list the due date, the late date, and the potential fees. The easier you make it for honest people to pay, the fewer delinquencies you will have to manage.

Partnering with Goodwin & Company for Financial Health


Managing a community is a complex undertaking, and financial enforcement is often the most stressful aspect for volunteer boards. This is where we step in. As a premier homeowners association management company serving Texas and Colorado, Goodwin & Company takes the burden of collections off your shoulders.

We believe that technology and empathy can coexist. We utilize advanced software for automating dues collection for HOAs, which allows us to send automated reminders, process payments instantly, and track delinquencies in real-time. This automation ensures that no deadline is missed and no required notice is forgotten, protecting the association’s legal standing.

However, software is only half the equation. We also understand the human element. When a neighbor falls behind, our team handles the communication professionally and respectfully. We act as the buffer between the board and the resident, preserving community relationships while firmly upholding the financial obligations of the association. Whether it is setting up a payment plan compliant with state codes or working with an HOA collection agency for severe cases, we manage the entire lifecycle of the debt.

If you are looking for a community management company for homeowners association governance that prioritizes financial stability without sacrificing community spirit, we are here to help. We navigate the complexities of state laws so you can focus on what matters—making your neighborhood a wonderful place to live.

An effective HOA Collection Policy is more than just a document; it is a commitment to fairness and financial responsibility. It protects the paying neighbors from subsidizing the non-paying ones, and it protects the association from legal pitfalls. By establishing clear rules, communicating them openly, and enforcing them uniformly, you secure the resources needed to maintain your community’s value and charm.

Don’t let uncollected dues dictate your community’s future. Let’s work together to build a financial foundation that lasts.

Are you ready to streamline your collections process and secure your community’s financial health? Contact Goodwin & Company today to discuss how our management solutions can support your board.