Most boards don't plan for a late account until they have one. Then the treasurer and the president trade emails about whether to send a letter, add a late fee or wait. Each choice gets made from scratch, and each comes out a little different.
An HOA collection policy settles those questions before anyone falls behind. It's a short written document, adopted by the board, that says when dues are due, what happens when they're late, and who decides at each step. Once it's in place, each late account moves to the next step on a list.
What an HOA collection policy covers
The declaration usually gives the association the power to levy assessments and charge for late payment. The policy turns that power into a schedule the board can follow and owners can read. For a refresher on where assessments come from, our guide to how HOA dues work covers the basics.
The declaration and your state's statute decide what's allowed for your community. The policy can't give the board powers the documents don't grant, and it can't skip steps that state law requires.
Due dates, the grace period and the late fee
Start with the calendar. Name the due date for each installment, then the grace period: the number of days after the due date before a payment counts as late.
The late fee comes next. Write the amount or the formula, the day it applies, and whether it repeats each month the balance stays open. Do the same for any interest. Your declaration may already set these figures, and some states cap late fees or interest, so check both first.
Write down the order in which payments are applied, too. When an owner sends a partial payment, does it go first to the oldest assessment, to fees or to interest?
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The reminder and notice sequence
List each communication, when it goes out and how it's delivered. A simple version:
- A friendly reminder a few days before the due date.
- A past-due notice after the grace period ends, showing the balance and any late fee.
- A second, more formal notice at a set number of days past due.
- A final notice by certified mail before the account moves to an attorney or agency.
Keep owner notices plain. A line such as "Your account shows a past-due balance of $[amount] as of [date]. Please pay by [date] or contact the board to talk about options" says what's needed without heat.
Some states write parts of this sequence for you. In Texas, an association can't hold an owner liable for a collection agent's fees unless it first sends a certified-mail notice that lists each delinquent amount and the total due and gives the owner a period of at least 45 days to cure before further collection action. Where state law or the association's documents call for a payment plan, the notice also describes the owner's options to avoid turnover, including that plan. A Texas policy should list that notice as a fixed step.
Payment plan standards
Decide whether owners can ask for a payment plan, and write down the standards: the shortest and longest term, whether new assessments must stay current during the plan, what administration cost or interest applies, and what happens after a missed payment.
Texas also sets rules for plans. Its property code says an association with more than 14 lots shall adopt reasonable guidelines to establish an alternative payment schedule, so an owner can make partial payments on delinquent amounts without additional monetary penalties. The plan term must be at least three months, and the association doesn't have to allow one that runs more than 18 months from the owner's request. It must also file its guidelines in the real property records of each county where the subdivision sits. A Texas board can fold those guidelines into its collection policy.
Attorneys, agencies and the lien step
Name the trigger for outside help. That may be a dollar amount, a number of days past due, or the end of the notice sequence with no response. Then name who makes the call.
The lien step needs its own line in the policy. Whether your association can record a lien depends on the declaration and state law. The policy should say who authorizes a lien filing, what notice the owner gets first, and how the board releases the lien once the account is paid.
Who decides at each step
Vague authority puts the treasurer back to guessing. Assign each step to a person or to the board. For example:
- The treasurer sends reminders and routine notices, and applies late fees, on schedule without a vote.
- The full board approves any payment plan that falls outside the written standards.
- The full board votes to refer an account to an attorney or agency, or to authorize a lien.
Applying each step the same way to every owner keeps the policy fair. If one owner gets three extra months and the next gets a lien, the policy hasn't done its job. Our board playbook on fair rule enforcement covers the same principle for violations, and it carries over to dues.
A sample outline of the policy
This is a skeleton for the board to fill in, not legal text:
- Purpose and authority (the declaration section that grants collection powers)
- Due dates and grace period
- Late fees and interest
- Application of payments
- Reminder and notice schedule, with delivery methods
- Payment plan standards
- Referral to an attorney or collection agency
- Liens and other remedies
- Authority at each step
- How an owner raises a question about a balance
- Adoption date and annual review
Have the association's attorney review the draft before the board adopts it.
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Adopting the policy and applying it
Adopt the policy by resolution at an open board meeting, and record the vote in the minutes. Send a copy to every owner by the delivery method your documents require, and post it wherever owners find association documents. Apply it to every account from the next due date, and review it yearly with the budget.
Once the steps are written down, software can keep the schedule. On the HOA-OS Community plan ($49 a month), the board sets its late fee rules and HOA-OS applies late fees on that schedule, sends upcoming and overdue payment reminders, and lets the treasurer send collection letters from the board's own templates to one owner or many at once. Each unit's page shows its ledger. The Premium plan ($89 a month) adds lien management and tracking, plus a Delinquency report (on screen or as a CSV file). On any plan, a certified notice can be printed and mailed through the mail center for a per-piece charge. Every plan comes with a 30-day free trial, and you can compare them on the HOA-OS pricing page.
Sources
- Texas Property Code 209.0064, Third Party Collections, FindLaw
- Texas Property Code 209.0062, Alternative Payment Schedule for Certain Assessments, FindLaw
- lien, Legal Information Institute, Cornell Law School
Related Reading
- What Happens If You Don't Pay HOA Fees? (And How Boards Should Handle It)
- HOA Liens: How They Work and How to Avoid One
- Selective Enforcement: How Boards Lose HOA Disputes
- HOA Meeting Minutes: What to Include and Why It Matters
Put a draft collection policy on your next open meeting agenda with a motion to adopt it by resolution.