An owner who's three months behind usually wants what the board wants: a way back to a zero balance. An HOA payment plan gives both sides that path, as long as the terms are written down and the board offers the same terms to the next owner who asks.
A plan for an owner who has fallen behind on regular dues works differently from a plan the board offers everyone when it levies a large one-time charge; that second kind is covered in HOA special assessment payment plans.
What an HOA payment plan is for
A payment plan is a written agreement that lets an owner pay a past-due balance in installments while keeping up with new assessments. The association gets paid, the owner avoids the next collection step while the plan is current, and the board has a record of what was agreed.
Without written standards, each request becomes a fresh negotiation, and an owner's terms can depend on who's on the board that year. When the same standards apply to every request, owners in the same position get the same terms.
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The standards belong in your HOA collection policy, next to the due dates, the late fee and the notice sequence.
How Texas and California set rules for plans
In Texas, Property Code 209.0062 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 assessments or other amounts owed without additional monetary penalties. The plan term has to be at least three months.
The statute also lists what the association doesn't have to do: allow a plan that extends more than 18 months from the owner's request, enter a plan with an owner who failed to honor a previous plan during the two years after that default, offer a plan after a cure period set in a related collection section has expired, or allow more than one plan per owner in any 12-month period. Reasonable costs of administering the plan and interest don't count as monetary penalties, so the association may charge those. The guidelines must be filed in the real property records of each county where the subdivision sits, though a failure to file doesn't stop an owner from getting a plan.
In California, Civil Code 5665 lets an owner submit a written request to meet with the board about a payment plan for a delinquent debt the association has noticed, and the association must give owners its payment plan standards if it has any. If the owner mails the request within 15 days of the notice's postmark, the board must meet with the owner in executive session within 45 days of the request's postmark. If no regular board meeting falls in that window, the board may appoint a committee of one or more directors to meet. For how those closed meetings run, see what a board can discuss in executive session.
A California plan can include assessments that come due during it, and no additional late fees accrue while the owner complies. If the owner defaults, the association may resume collection from where it stood before the plan.
Other states handle plans differently, and some say nothing about them. Your declaration and your state's statute decide what applies to your community.
Writing the board's plan standards
Standards answer the questions every request raises. A short set might cover:
- Who is eligible, for example an owner who isn't in default on an earlier plan within a period the board sets
- The shortest and longest plan the board will approve
- Any down payment required at signing
- How many plans one owner can have in a given period
- Who approves a request: the full board, the treasurer within set limits, or a committee
Where a state sets its own terms, the standards start from those; a Texas board covered by the statute can't write a minimum term shorter than three months. Have the association's attorney review the standards, then adopt them by resolution at an open meeting and send them to every owner.
Apply them to every request. If the board approves something outside the standards, record the reason in the minutes.
What a payment plan agreement states
Each plan gets its own signed agreement, built from the same template every time. The agreement should state:
- The owner's name, the unit or lot, and the account it covers
- The past-due balance the plan covers, itemized into assessments, late fees, interest and other charges, as of a stated date
- The installment amount, each installment's due date and the number of installments
- How and where the owner makes payments
- That new assessments must be paid on time while the plan runs
- Whether late fees stop while the owner stays current, and any interest or administrative fee the plan charges
- How each payment is applied, following any order the declaration or state law sets
- What counts as a missed installment, including any grace period
- What happens on default, in plain words
- Whether the association may still record a lien during the plan
- Signatures and dates for the owner and an authorized board member, with a copy to the owner
California's Civil Code 5665 shows why the lien line belongs in the agreement: a payment plan there doesn't stop the association from recording a lien to secure the delinquent assessments. A lien is "a security interest or legal right acquired in one's property by a creditor," in the words of the Cornell Legal Information Institute's definition, and it usually keeps the property from being sold until the obligation is satisfied. Owners should know that before they sign.
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When an owner misses an installment
The agreement should already answer this. One workable sequence is a reminder when an installment is late, a written notice of default if it isn't paid within the stated grace period, and then a return to the collection policy at the step the account had reached before the plan. California's statute works that way: after a default, collection picks up from where it stood. In Texas, an owner who fails to honor a plan can be refused a new one for two years after that default.
If the board ever waives a default, the standards should say when that's allowed and the minutes should say why.
Keeping the plan record straight
A plan only works if everyone can see whether it's being kept. Each month, the treasurer needs to know which accounts are on a plan, which installments arrived and which are late.
On the HOA-OS Community plan ($49/mo), each unit's page shows that unit's ledger with every charge and payment, so the board can check each installment against the signed agreement. Upcoming and overdue payment reminders go out by the rules the board sets, and collection letters come from the board's own templates if an account returns to the collection sequence. The plan terms themselves live in the signed agreement the board keeps on file. You can see what each tier includes and start a 30-day free trial on the HOA-OS pricing page.
Sources
- Texas Property Code 209.0062, Alternative Payment Schedule for Certain Assessments, FindLaw
- California Civil Code 5665, 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)
- Selective Enforcement: How Boards Lose HOA Disputes
- HOA Meeting Minutes: What to Include and Why It Matters
With written plan standards on file, the board won't end up offering one owner terms it refused the owner next door.