Does Your HOA’s Budget Include a Line Item for “Bad Debt?” ….. It Should

Assessment income is the lifeline for homeowners associations. Without owners paying assessments to the association, the association has insufficient income to pay its expenses. Despite the importance of the association collecting assessments from every owner, in the real world there are things that happen in the lives of homeowners that interfere with their ability to pay their homeowners association’s assessments. Since association’s budgets are based on expected revenue and expenses, the impact of not receiving anticipated assessments frequently depends on whether or not the association had included a line item for “bad debts” in the association’s budget.

When assessment income is included in an association’s annual budget, it assumes that[…]