A written collection policy removes ambiguity and ensures consistent treatment of all homeowners.

Essential policy elements:

• Due date: When assessments are due (typically the 1st of each month)
• Grace period: Days after due date before late fees apply (often 10-15 days)
• Late fee: Amount charged for late payment (must be authorized by your documents)
• Interest: Ongoing interest on unpaid balances (if authorized)
• Collection timeline: What happens at 30, 60, 90 days past due
• Legal referral: When accounts are sent to an attorney for collection

Tennessee considerations:

• Your authority for late fees and interest comes from your Declaration, not state law
• If your documents don't authorize late fees, you may need to amend them
• Fee amounts should be reasonable. Excessive fees may be unenforceable.

Once adopted, the policy must be applied consistently. Selective enforcement undermines credibility and creates fair treatment issues.

The easier you make payment, the more likely you are to collect on time. Friction in the payment process leads to delays.

Payment methods to offer:

• Online payments: ACH (bank transfer) and credit/debit card through owner portal
• Automatic payments: Set-and-forget recurring drafts from bank accounts
• Check by mail: Still necessary for some owners
• Bill pay: Accept payments from owners' bank bill pay services

Encouraging automatic payment:

• Waive processing fees for ACH payments
• Promote auto-pay in every communication
• Make enrollment easy with online signup
• Consider incentives for enrollment (waived late fee, small credit)

Communities with high auto-pay enrollment typically have lower delinquency rates. People who set up automatic payments rarely fall behind.

The longer an account is delinquent, the harder it is to collect. Early, consistent action is the most effective approach.

Typical collection timeline:

• Day 1: Assessment due
• Day 15: Late fee applied (after grace period)
• Day 20: Reminder notice sent (friendly tone)
• Day 30: First formal demand letter
• Day 45: Phone call or personal contact attempt
• Day 60: Second demand letter (firmer tone)
• Day 90: Final notice before legal action
• Day 120: Referral to collection attorney

Communication best practices:

• Start with friendly reminders. Many late payments are simple oversights.
• Escalate tone gradually as time passes
• Document all communication attempts
• Provide clear information about balance, fees, and how to pay
• Offer to discuss payment arrangements before escalating

One Williamson County community reduced their 90+ day delinquencies by 40% simply by adding a friendly reminder email at day 20. Most late payers aren't refusing to pay. They just forgot.

Sometimes homeowners genuinely can't pay on time. Payment plans can help you collect while accommodating temporary hardship.

When to offer payment plans:

• Owner contacts you proactively about difficulty
• Documented hardship (job loss, medical issues, divorce)
• Owner has history of timely payment
• Plan shows clear path to full payment

Payment plan terms:

• Get the agreement in writing, signed by the owner
• Require current assessments to be paid on time plus installments on arrears
• Set clear consequences if the plan isn't followed
• Include waiver of certain fees as incentive for compliance
• Typical duration: 3-12 months depending on amount owed

When not to offer plans:

• Owner has defaulted on previous payment plans
• No realistic ability to catch up
• Owner is unresponsive or uncooperative
• Pattern of chronic delinquency

Payment plans should be exceptions for genuine hardship, not standard practice. If many owners need plans, your assessments may be set too high for the community's economic reality.

When collection efforts fail, legal remedies may be necessary. Understanding your options helps you make informed decisions.

Assessment liens:

• Tennessee law allows associations to file liens for unpaid assessments
• The lien attaches to the property and must be satisfied at sale or refinancing
• Filing requirements and procedures vary; use an attorney familiar with HOA liens
• Liens should be filed promptly to protect priority position

Foreclosure:

• Possible but rarely used for assessments alone
• More common when combined with significant other violations
• Complex process requiring legal counsel
• May be appropriate for abandoned properties with large balances

Small claims and civil court:

• Judgments can be obtained for unpaid assessments
• Allows wage garnishment and bank levy in some cases
• Judgments can accrue interest and be renewed

Working with collection attorneys:

• Use attorneys who specialize in community association law
• Understand their fee structure (some work on contingency for larger balances)
• Attorney fees are often recoverable if your documents authorize it
• Review their recommended collection approach before engaging

Some collection situations require special handling due to legal complexities.

When a homeowner files bankruptcy:

• An automatic stay stops most collection activity immediately
• You must file a proof of claim to recover pre-petition amounts
• Post-petition assessments may be treated differently depending on bankruptcy type
• Consult with an attorney before any collection action on bankrupt owners

When a bank forecloses:

• The new owner (usually the bank) becomes responsible for assessments going forward
• Prior owner's unpaid assessments may be uncollectable depending on priority and circumstances
• In Tennessee, your lien priority depends on when it was filed relative to the mortgage
• Track bank-owned properties and bill the servicer for ongoing assessments

Deceased homeowners:

• The estate becomes responsible for assessments
• File a claim with the probate court if estate is being administered
• The property remains liable regardless of estate status
• Work with heirs to resolve outstanding balances before property transfer