An effective collection policy should exhibit each of the following EXCEPT:

An effective collection policy should exhibit each of the following EXCEPT:

• A. Be established by a proper formal resolution of the board
• B. Prohibit the referral of delinquent assessments to legal counsel
• C. Set a firm due date for assessments
• D. Allow for discretion in special cases

Answer: (B)

An effective collection policy rests on clear, enforceable steps that ensure timely payments and protect the association’s finances. It should be adopted by the board through a formal resolution to give the policy proper authority and ensure it’s applied consistently to all owners. It should set a firm due date so everyone knows exactly when payments are due and when late charges or interest may begin, creating predictable expectations. It should also allow for discretion in special cases, such as hardship situations or unique payment circumstances, so responses can be fair and tailored without abandoning consistency. What does not fit is prohibiting referral to legal counsel. In practice, a comprehensive collection policy includes a progression of actions, and escalating to legal counsel after reasonable pre-litigation steps is a standard, prudent part of recovering delinquent funds. This protects the association’s financial health and helps ensure timely, lawful enforcement. A policy that forbids any referral to legal counsel would hinder proper collection and could lead to greater losses or legal exposure.

An effective collection policy rests on clear, enforceable steps that ensure timely payments and protect the association’s finances. It should be adopted by the board through a formal resolution to give the policy proper authority and ensure it’s applied consistently to all owners. It should set a firm due date so everyone knows exactly when payments are due and when late charges or interest may begin, creating predictable expectations. It should also allow for discretion in special cases, such as hardship situations or unique payment circumstances, so responses can be fair and tailored without abandoning consistency.

What does not fit is prohibiting referral to legal counsel. In practice, a comprehensive collection policy includes a progression of actions, and escalating to legal counsel after reasonable pre-litigation steps is a standard, prudent part of recovering delinquent funds. This protects the association’s financial health and helps ensure timely, lawful enforcement. A policy that forbids any referral to legal counsel would hinder proper collection and could lead to greater losses or legal exposure.