The HOA Delinquent Dues Collection Process: What Boards Actually Need to Do

A unit owner misses a payment. Then another. The treasurer notices three months later when someone asks about the reserve balance. By then the delinquency is $2,400 and climbing.

This is the most common financial problem in community associations. Not fraud. Not embezzlement. Just slow, compounding, unmanaged delinquency.

Most boards handle it poorly — not because they are negligent, but because they have no process.

Why Delinquencies Compound

The mechanics are simple. A $400 monthly assessment goes unpaid. Late fees accrue. The next month's assessment posts. The balance grows. The owner stops opening mail from the HOA.

By month six the balance is over $3,000. The board finally discusses it at a meeting. Someone suggests sending a letter. Someone else suggests going straight to a lien. Nobody is sure what the governing documents actually allow, and nobody knows whether the statutory notice requirements have been met.

Meanwhile, the association's operating budget assumed 100% collection. That assumption is now wrong by $3,000 and growing. If multiple units are delinquent, the association may not be able to pay its own bills.

The problem is not the delinquent owner. The problem is that the board has no defined process that runs automatically from the first missed payment.

The Process That Works

Effective delinquency management is not aggressive. It is consistent, documented, and early. The goal is to recover the money and preserve the community relationship — not to punish the owner.

Here is what the process looks like when it works:

Day 1: Assessment Posts to the Ledger

The monthly assessment posts to the owner's ledger on the due date. This is an accounting event, not a billing event. The owner's balance increases by the assessment amount. If the association uses fund accounting, the charge is allocated to the correct fund — operating, reserve, or special assessment — with a journal entry that debits accounts receivable and credits assessment income.

What matters here: The charge must post automatically on schedule. If posting depends on someone remembering to do it, the entire downstream process — late fees, notices, aging reports — is unreliable. Automated assessment generation from a configured schedule eliminates this dependency.

Day 15–30: Late Fee Applies

If payment has not been received by the grace period deadline, a late fee posts automatically to the owner's account. The amount and timing should be defined in the association's collection policy and consistent with the governing documents.

Washington law requires that late charges be "reasonable." For WUCIOA communities (RCW 64.90.485), during the initial notice period the association may charge a single late fee not exceeding $50 or 5% of the unpaid assessment amount, whichever is less. Most associations define their standard late fee as $25–$50 flat or a percentage of the assessment, as permitted by their CC&Rs.

The late fee must be a ledger entry — a journal entry that debits AR and credits late fee income — not a note in a spreadsheet. It must appear on the owner's statement with the same fidelity as the original assessment. The system should support multiple late fee types: flat amount, percentage of balance, or daily interest rate, with a configurable cap.

What matters here: Late fees must be applied uniformly. If some owners get late fees and others don't depending on who was paying attention that month, the association has created a selective enforcement problem that undermines its legal position.

Day 30: First Pre-Foreclosure Notice

This is where Washington law gets specific — and where most associations make mistakes.

Under the 2023 amendments to RCW 64.90.485, RCW 64.34.364, and RCW 64.38.100, associations must now send two separate pre-foreclosure notices at defined intervals before any foreclosure action can be taken. The first notice must be sent no later than 30 days after the assessment becomes past due.

The first notice must be sent by first-class mail to the owner's property address and any other address the owner has provided to the association. If the association has the owner's email address, it must also be sent electronically (effective January 1, 2026 for WUCIOA communities).

The notice must contain specific statutory language:

"THIS IS A NOTICE OF DELINQUENCY FOR PAST DUE ASSESSMENTS FROM THE [UNIT OWNERS' / HOMEOWNERS'] ASSOCIATION TO WHICH YOUR [UNIT / HOME] BELONGS."

It must also include: - The amount currently owed (assessments only — fines, late charges, interest, and attorney fees must be stated separately) - Contact information for housing counselors and legal aid services, obtained from the Washington Department of Commerce - A statement that the owner may request a payment plan - Information about the owner's right to dispute the charges

Critical compliance point: During the first 15 days after sending this notice, the association may not take any further collection actions beyond printing, mailing, and a maximum $10 administrative fee in addition to the single late fee. This 15-day moratorium is statutory. Violating it can expose the association to liability.

What matters here: The notice must reference actual ledger balances. If the notice says the owner owes $847 and the actual balance is $872 because a late fee posted yesterday, the association has a credibility and compliance problem. Balances pulled from a live general ledger at the moment of notice generation eliminate this discrepancy.

Day 60–90: Board Review and Aging Analysis

At 60 days past due, the delinquency should appear on the board's aging report. A properly structured aging report breaks accounts receivable into five standard buckets:

The board should review the aging report in executive session and document its decision for each delinquent account:

• Continue standard collection timeline — no special action needed
• Offer a payment plan — owner has communicated, willing to resolve
• Refer to association attorney — for legal guidance on next steps

The board's decision must be recorded in the meeting minutes (executive session). If the matter later escalates to a lien or lawsuit, the association needs to demonstrate that it followed a reasonable, consistent process and gave the owner adequate notice and opportunity.

Day 90+: Second Pre-Foreclosure Notice

The second pre-foreclosure notice may not be mailed sooner than 60 days after the first notice and may only be sent at or after assessments have been past due for at least 90 days.

This timing is statutory — not discretionary. Sending the second notice too early invalidates it.

The second notice must contain the same statutory language and updated balance information. It should also restate the owner's right to request a payment plan and include updated housing counselor contact information.

Payment Plans

If the owner responds and is willing to pay, a formal payment plan is the preferred outcome for most associations. The plan should be:

• In writing, with specific amounts and scheduled payment dates
• Approved by the board (or by a designated officer per board resolution)
• Tracked in the accounting system with each scheduled payment logged against the owner's account
• Subject to a default clause — typically, missing two consecutive payments triggers default and accelerates the full balance

A well-structured payment plan includes a down payment, monthly installments, an optional interest rate, and automatic default detection. Each payment should apply to the owner's outstanding invoices using a defined allocation method (oldest-first is standard).

Foreclosure Threshold

Washington law imposes strict conditions before an association can commence foreclosure proceedings. The association may not commence a foreclosure action unless all of the following are true:

These requirements apply across all three current governing statutes (RCW 64.90.485, RCW 64.34.364, RCW 64.38.100) as amended in 2023.

Lien Priority

Understanding lien priority is important for both the association and mortgage holders:

The association's lien for assessments has priority over most encumbrances except: 1. Liens recorded before the declaration 2. A mortgage recorded before the delinquent assessment became due 3. Real property tax liens and government assessments

However, the association's lien has super-priority over even first mortgages for up to six months of regular assessments (excluding capital improvements) plus foreclosure costs up to $2,000, provided the mortgagee received proper 60-day notice.

If the association forecloses nonjudicially under chapter 61.24 RCW (deed of trust), it loses this super-priority status. Judicial foreclosure preserves it.

Statute of Limitations

The lien for unpaid assessments and the personal liability for payment are extinguished unless proceedings to enforce the lien or collect the debt are instituted within six years after the full amount of the assessments sought to be recovered becomes due (RCW 64.90.485). For associations governed by RCW 64.38 (legacy HOAs), the Washington Court of Appeals has similarly established a six-year statute of limitations (Kiona Park Estates v. Dehls, 2021).

This means that old delinquencies cannot be left to accumulate indefinitely. Boards must act within the statutory window or lose their enforcement rights.

What Goes Wrong Without a System

When delinquency management is manual, every step breaks:

Late fees are inconsistent. Some owners get late fees, others don't, depending on who was paying attention that month. This creates fair housing exposure and makes the association's collection efforts legally vulnerable to selective enforcement claims.

Notices are late or missing. The first pre-foreclosure notice goes out at 45 days instead of 30. The second notice is sent only 30 days after the first instead of the required 60. The statutory language is paraphrased instead of quoted. Any of these errors can invalidate the foreclosure path.

Board decisions are undocumented. The board discussed the delinquency at the March meeting but nobody recorded the decision. When the attorney asks for the collection history, there is nothing to produce.

Balances are disputed. The owner says they paid in February. The treasurer says they didn't. The payment was actually applied to the wrong owner's account in QuickBooks. Nobody can prove what happened because the payment allocation was done manually.

The process is different every time. Owner A got a payment plan at 60 days. Owner B went straight to lien at 90 days. Owner C was never contacted at all. This inconsistency exposes the board to claims of selective enforcement and potential fair housing violations.

Aging reports are stale. The treasurer runs the aging report at month-end. By mid-month, two more owners have gone delinquent and one has paid, but nobody knows because the report is already outdated.

What the Process Looks Like With a System of Record

When the entire collections workflow lives in the association's accounting system, the dynamics change:

Assessments post automatically. No human action required. The charge appears on the owner's ledger on the due date, every month, with the correct journal entry posting to the general ledger.

Late fees are policy-driven. The system applies the late fee per the association's configured policy — flat amount, percentage, or daily rate — with a grace period and optional cap. Every owner is treated identically.

Aging reports are always current. The board can see every delinquent account, distributed across five standard aging buckets (current, 1–30, 31–60, 61–90, 90+), at any moment — not just at month-end. Collection effectiveness metrics like days sales outstanding (DSO) and collection rate are calculated from live data.

Payment plans are structured and tracked. When the board approves a payment plan, each scheduled payment is tracked in the system. If a payment is missed, the system detects it and can trigger a default based on the plan's configured threshold.

Every action is logged. Assessments posted, late fees applied, notices generated, payments received, payment plans created, board decisions recorded. The complete history of every delinquent account is preserved as an immutable audit trail.

Balances are undisputed. When the owner or their attorney asks "what do I owe?", the answer comes from the ledger — the same ledger the board sees, the same ledger the attorney will rely on, the same ledger that generates the resale certificate when the unit eventually sells.

The Collection Policy Document

Every association should have a written collection policy adopted by board resolution. This document should specify:

1. Due dates and grace periods — When assessments are due and how many days before late fees apply
2. Late fee structure — Fixed amount, percentage, or daily rate, consistent with governing documents and state law
3. First notice timeline — Must be within 30 days per statutory requirement
4. Second notice timeline — At least 60 days after first notice and 90 days after delinquency
5. Payment plan terms — When offered, maximum duration, down payment requirements, default provisions
6. Lien threshold — Must meet statutory minimums (greater of 3 months or $2,000 in assessments)
7. Attorney referral criteria — When the matter is referred to counsel
8. Interest rate — If the governing documents permit interest on delinquent balances
9. Waiver authority — Who can waive late fees or modify the collection timeline, under what documented circumstances
10. Board approval process — How and when the board approves escalation to lien or foreclosure

The policy must be applied uniformly. Selective enforcement is the fastest way to undermine the association's legal position and expose the board to liability.

Upcoming Statutory Changes: WUCIOA for All

Boards should be aware of a significant change on the horizon. The Washington Legislature passed SB 5796 and SB 5129 in 2025, which phase in WUCIOA (RCW 64.90) applicability to all common interest communities regardless of formation date:

• January 1, 2026: Core WUCIOA provisions apply to all communities
• January 1, 2028: Full WUCIOA applicability; legacy statutes (RCW 64.34, 64.38, 64.32) are repealed

This means that associations currently governed by the older Condominium Act or Homeowners' Associations Act will need to comply with WUCIOA's collection and foreclosure requirements, including the two-notice framework, minimum foreclosure thresholds, and the 15-day moratorium after the first notice.

For more on these changes, see Washington HOA Law Changes for 2026.

The Bottom Line

Delinquency collections is not a crisis to manage. It is a workflow to run.

When that workflow is defined in a written policy, executed by automated systems, and documented in an immutable ledger, the board's exposure shrinks:

• Owners are treated consistently (fair housing compliance)
• Notices are timely and contain required statutory language (statutory compliance)
• Board decisions are recorded with timestamps (fiduciary duty documentation)
• Balances are calculated from the general ledger and undisputed (legal defensibility)
• The association's cash flow is predictable (budget accuracy)
• The statute of limitations is tracked (enforcement rights preserved)

The associations that struggle with delinquencies are not the ones with bad owners. They are the ones without a system.

See how CommunityPay automates assessment tracking and collections workflows