It’s All Automatic

Randy Grant doesn’t have to think too hard to remember the bad old days, when he and his fellow condo board members would try to tally up who owed what on their monthly collections. For the seven-member board of Society Hill at University Heights in Newark, a 471-unit condominium that opened in 1994, it was like a game of roulette – waiting for the monthly reports from the managing agent, factoring in repeat offenders, tallying up the late fees and then getting out the adding machine. And still the figures would be arbitrary. Because of all the back and forth between the board and the managing agent and the homeowners in arrears, the board was “always behind 35 to 40 days to seeing real-time data,” remembers Grant, a member of the board since early 2005 and president since 2008. Collections suffered because of that lack of accuracy.

Then, two years ago, the Society Hill at University Heights condo board was invited by its attorneys, Stark & Stark, to meet with software designers from the Texas-based company Collectronics to talk about ways to improve the data flow about homeowner collections. At the meeting, Grant and his colleagues were introduced to a novel collections process: the Online Co-op and Condominium Tracking System (OCATS). It could be tracked electronically from a secure website, so the board members would have up-to-the-minute information on who was in arrears. David J. Byrne, a partner with Stark & Stark who spearheaded the meeting, explains that it was critical for the law firm to get the board’s feedback. “They were one of our biggest clients, so we wanted to know whether they would use the system and how often.” Grant and his fellow board members responded enthusiastically to the idea.

OCATS users go to a website (sss.live.collectronics.net), enter a user name and password, and have literally the whole history of their specific condo or co-op’s collection process at their fingertips. The red-and-white OCATS screen opens up in a grid, where board members and management companies can enter the names and addresses of homeowners in arrears and find out where each debtor is in the collection process. The best part about the system is that not only does it save time, but it also saves money. Board members no longer have to call or e-mail Stark & Stark to find out where a particular homeowner is in the collections process.

“A lot of legal fees are about communication with the attorneys,” points out Byrne. Phone calls – for reports and updates and to ask questions – add up. If board members can go online and find out information for themselves, they can get answers faster, and for free. While the attorney acknowledges that his law firm bills fewer hours to boards that use OCATS, Byrne believes that positive word of mouth has increased the law firm’s client base. And it has been an enormous benefit to the law firm’s own record-keeping. “It’s a more productive and efficient system and it helps my staff manage cases better,” he says.

For condo and co-op boards that use OCATS, the ease of retrieving information at the click of a mouse is seductive. By simply entering a user name and password on the secure OCATS website, Grant and his board members have immediate access to a multiplicity of information: how much is owed by whom, how late the common charges are, how many warning letters have been sent, whether a lien has been filed or bankruptcy proceedings have started, thereby taking all the guesswork out of where the condo or co-op is in the collection process (i.e., “Jane Smith, XYZ Co-op. Sent two warning letters about late maintenance. Matter will be referred for further action in 30 days, with a lien to be filed.”).

“Historically, you have to wait at the end of the month to get a report from attorneys and the management agent, which tells you what your total delinquencies are. With OCATS, I can look at it and if there is anything I need to address as board president, make a decision,” says Grant, adding, “it’s helped us manage the whole collection process better.”

Not only has the board increased its productivity using OCATS, but it has been able to move more swiftly in recouping late common charges. Grant estimates that when he got on the board in early 2005, delinquencies amounted to 20 percent of the condo’s overall budget. Today, that figure is down to 10 percent.

“It takes all the guesswork out of where you are with a case,” notes Eliza Jacobs, regional manager for IMPAC Management and the managing agent for Society Hill at University Heights. It helps the managing agent stay in better control of the paperwork, she adds, and track all of the information going back and forth between the condo’s attorneys and any given debtor.

In a tightening economy, that is particularly crucial. Right now, Society Hill at University Heights has between 20 and 30 active collection accounts, a figure Grant predicts will almost double as the economy worsens. By using OCATS, the board members know quickly which homeowners are late on their common charges, which allows them to respond more quickly to recoup that money. And the more quickly the board and its attorneys act, the better. Observes Byrne: “Every day a lawyer doesn’t respond is a day that we don’t have access to the assets.”

Grant agrees. With the productivity gained in tracking arrears online, he and his fellow board members are tightening up the collection process, going after delinquent homeowners more quickly and aggressively.

For instance, in the past, condominium owners late with their common charges could count on two letters from management before the third warning and a lien proceeding. Spurred on by OCATS, Grant says he is pushing for only one warning letter before the lien process is started. With the economy doing so badly, the situation could quickly get out of hand. Explains Grant: “We have to protect the rest of the homeowners.”