A New Era for AR Recovery in HOAs and COAs
Like many other industries, community association management is experiencing a major technology shift. With economic pressures mounting and state laws tightening, homeowner associations (HOAs) and their management companies face a perfect storm: rising delinquencies, complex legal requirements, and higher service expectations from homeowners.
In fact, HOAs and condo associations nationwide are carrying nearly $9 billion in past-due assessments and collection costs, representing a huge pool of money not being used to sustain financially sound communities. At the same time, advances in technology – especially artificial intelligence (AI) – are offering unprecedented tools to recapture that revenue and streamline compliance.
2025 is a critical window for adopting these tools. Things are moving fast with tech and AI, and missing out by 2026 could leave management companies struggling to catch up.
The Rising Challenge: Delinquencies and Compliance Pressures
HOA management companies know that even a small uptick in homeowner delinquency can strain community finances. Economic forecasts suggest headwinds going into 2025: HOA fees are climbing (often outpacing inflation) and a slowing economy and uncertainty towards the future is resulting in a rise in consumer delinquency overall. Most delinquent accounts could be resolved with a quick reminder, but in reality, community managers are juggling dozens of overdue accounts at once, making it easy to fall behind on collection efforts. Best practices call for proactive, multichannel outreach – emailing, texting, mailing notices early and often – to nudge homeowners before fees become seriously overdue.
The hurdle is that manual outreach at scale quickly becomes overwhelming. Managers spend hours chasing down past-due payments: tracking each homeowner’s contact preferences, sending individualized reminders, making phone calls, logging every reply, and managing payment plans one by one. All of this must be done while staying up-to-date on complex state-by-state rules for collections and liens. Every state has its own strict laws governing things like required late notices, interest caps, lien timing, and foreclosure procedures. Manually tracking these legal requirements – and frequent legislative changes – is a huge burden on management teams. Failing to comply can lead to voided liens or legal penalties, so there’s zero room for error in the process.
In short, traditional approaches to HOA collections are labor-intensive and risky in today’s environment. The combination of rising delinquency risk and an evolving compliance landscape is pushing management companies to seek a smarter solution. Forward-thinking firms are realizing that technology and AI offer a way to do more with less: to contact homeowners promptly across multiple channels, follow the right legal steps automatically, and recover more of the community’s money without hiring more staff or resorting to attorneys too soon. The next section explores why 2026 is seen as a turning point – and why organizations that don’t modernize their accounts receivable (AR) processes now may find themselves left behind.
Why 2026 Is a Turning Point
“AI is no longer a luxury—it is an essential tool for forward-thinking associations,”
Brent Bassett, Director of Product, TechCollect
By all indications, 2026 will be a pivotal year for AI adoption in HOA finance and collections. As AI tools mature and prove their value, they are transitioning from “nice-to-have” to must-have in the business world. 96% of small business owners who have deployed AI in their businesses intend to continue their investments and 70% plan on increasing their investment in AI. Community association management companies that embrace AI now position themselves to capture a major competitive advantage going into 2026.
The financial upside is simply too big to ignore. A recent TechCollect analysis found that using generative AI in collections could increase the amount of debt collected without attorney involvement from $705 million to $6.3 billion nationwide. In other words, AI-driven workflows can help communities recover nearly nine times more delinquent dues before resorting to legal action. Those dollars go straight back into HOA budgets for 2026 – funding maintenance, insurance, and reserves – or into management company revenue streams via collection fees. Equally important, automation slashes the labor cost of processing each delinquent account, turning what used to be a cost center into a profit center. Early adopters are already seeing that 90% of past-due debts can be resolved without any staff time or legal expense when technology is used correctly.
Another reason 2026 looms large is the cumulative learning effect of AI systems. Modern AI platforms continually learn from every interaction – refining the optimal times, channels, and messages to engage homeowners. This means the sooner a management company deploys an AI-driven solution, the more data it gathers and the more effective it becomes. By 2026, companies that started in 2024 or 2025 will have highly tuned their systems, whereas late adopters will be starting from scratch. Given the rapid pace of improvement, a year or two of delay could put firms at a technological disadvantage that’s hard to overcome. In practical terms, missing out in 2026 means leaving money on the table and possibly losing clients to more efficient competitors.
The message is clear: the time to act is now, before this wave crests.
Harnessing AI for AI Recovery
Thankfully, the same innovations causing disruption – AI, machine learning, and advanced software integrations – also provide the solution. AI-powered collections platforms like TechCollect are designed to tackle the exact challenges we’ve outlined. These systems plug directly into a management company’s existing HOA software (e.g., accounting or property management systems) and supercharge the collections workflow without replacing your current tools. Once connected, the AI continuously syncs past-due accounts and gets to work:
- Data-driven analysis: Each delinquent account is analyzed using predictive algorithms to gauge the likelihood of payment and to segment homeowners by risk profile. For instance, the AI can identify which accounts are high-risk vs. an occasional late payer, and adjust its approach accordingly.
- Unique communication plans: Instead of a one-size-fits-all timeline, the AI creates a personalized outreach plan for every account. It chooses the optimal cadence (e.g. when to send reminders and how frequently) and the best channels for that homeowner – whether it’s email, text message, physical mail, or a combination. Research shows multichannel contact is key to reaching people effectively: some homeowners respond to texts, others to mailed letters. The AI ensures each person is contacted via their preferred channel at the right time.
- Automated outreach: Once the plan is set, the system executes it automatically and tracks every step. TechCollect’s AI will send out polite payment reminder emails, follow up with a text or printed letter if needed, and even place automated calls if that’s part of the strategy. All communications are logged in real time, and if a homeowner replies or makes a partial payment, the AI can adjust the next steps accordingly. Managers no longer have to manually send notices or remember follow-ups – it’s all happening in the background, 24/7.
- Embedded payment options: Modern homeowners expect easy, online payment methods. AI platforms integrate payment links directly into the notices – for example, a text might include a secure Apple Pay, Venmo, or bank transfer link so the homeowner can settle their balance instantly on their smartphone. Offering popular digital payment options removes friction from the process. In fact, providing methods like Venmo or Cash App greatly increases the likelihood of successful resolution, as many generations of homeowners now use these apps frequently for everyday payments.
- Adaptive tone and content: The messaging in each communication is tailored to be clear, compassionate, and compliant. Early reminders might have a friendly tone, while later notices become firmer but still respectful. The AI can incorporate details like the homeowner’s name, the specific amount due, the late fee policy, and even offer payment plan options automatically if required by law or policy. This personalization at scale is something even the best staff would struggle to achieve manually.
- Automated record-keeping: Every email sent, text delivered, letter mailed, and payment received is automatically recorded by the system. This creates a detailed audit trail for each account without managers having to lift a finger. If a situation does escalate, the HOA has ironclad documentation that it followed all required steps and timelines. It also means managers can easily see status updates (e.g. “Second notice sent Oct 15, awaiting response”) from a dashboard without digging through files.
The beauty of an AI “co-pilot” in collections is that managers can essentially “press play” and let it run. TechCollect’s platform, for example, takes a zero-touch approach: once the parameters are set, the AI handles the outreach and follow-up from start to finish. Community managers and board members can step in only when human judgment is truly needed – which, as data shows, is rare since the vast majority of accounts resolve through the automated workflow. This not only frees up staff time, but it also standardizes the process to avoid mistakes.
Crucially, compliance is baked in: the system enforces the correct notice schedule, grace periods, and fee limits for each state automatically, so that every action is legally compliant by default.
Real Results: Higher Revenue, Lower Delinquency (With Less Effort)
AI-driven collections aren’t just a theoretical improvement; they’re delivering tangible results for management companies and HOAs. Consider some of the key benefits and outcomes reported from trials and early adopters of platforms like TechCollect:
- No more manual chasing: Routine follow-ups that used to consume managers’ days now happen effortlessly in the background. In real-world pilots, AI tools have achieved a 100% reduction in inbound homeowner payment calls – virtually eliminating those time-consuming “I’m calling about my balance” phone queries. When homeowners receive timely, clear digital notices with self-service payment links, they no longer need to call the office for help, freeing staff from phone tag.
- Time back for high-value work: By offloading repetitive tasks, management teams can focus on bigger priorities (like improving operations and client service). Some companies have even doubled their portfolio of communities without needing to hire additional staff, thanks to the efficiency gains from automation. In other words, AI lets a management firm grow revenues and doors under management without a proportional rise in overhead – a huge boost to scalability.
- Higher collection rates: Perhaps the most impressive outcome is the improvement in collections performance. Tailored, consistent outreach means fewer debts falling through the cracks. Studies show that a personalized, automated communication strategy can recover over 90% of delinquent balances before any legal action is needed. That is a dramatic increase compared to traditional methods. By resolving most delinquencies in-house, HOAs avoid costly attorney fees and retain more of the assessment revenue (and homeowners avoid the stress of legal proceedings). It’s truly a win-win.
- Reduced errors and disputes: Automation brings uniformity and accuracy. With a set workflow, there’s far less chance of a manager forgetting to send a notice or calculating a late fee incorrectly. Every homeowner is treated fairly and consistently. This reduces mistakes, avoids disputes, and preserves trust between the management team and residents. Homeowners who do fall behind see they are being given every chance to pay via polite reminders and options, rather than feeling unfairly singled out.
- Rapid ROI and new revenue streams: For management company owners, the financial payback of AI tools tends to be quick. The combination of labor savings and improved recovery rates means the investment pays for itself within a short period. Beyond that, many firms are discovering new revenue opportunities through the platform. For example, TechCollect allows custom fee structures – the management company can charge a modest administrative late fee or interest (as allowed by state law) and the AI will add those charges into the workflow and remit them back with each payment. These fees, which might have been missed or hard to collect manually, become a meaningful income stream. By reducing manual workload while increasing collections, some management companies have boosted their profit margins by 10% or more after implementing AI. That margin goes straight to the bottom line or can be passed on as savings to client HOAs, making the company more competitive.
- Always-updated compliance: One of the unsung advantages of an AI platform is automatic compliance updates. When laws change or a state issues new guidelines, the software can be updated once and instantly enforce the new rules for all communities in that jurisdiction. TechCollect, for instance, adapts instantly to law changes, eliminating the risk of an outdated process leading to noncompliance. Management companies no longer have to frantically retrain staff or revise templates when a state legislature tweaks the collection statutes – the AI has it handled. This ensures peace of mind for company owners and HOA boards alike, knowing that every step remains within legal bounds.
AI-powered collections turn what was once an overwhelming, labor-intensive chore into a streamlined, high-performance operation. Delinquent assessments that might have lingered for months can be resolved in weeks, without straining staff or souring homeowner relationships. The HOA gets its funds more reliably, the management company improves its financial metrics, and homeowners receive professional, courteous treatment throughout. It’s not just about faster collections – it’s about healthier association finances and happier communities in the long run
New Legislation (and a Nationwide Trend)
One of the key reasons compliance has become such a focus is the recent wave of state laws reforming HOA collection and foreclosure practices. Legislatures across the country – responding to concerns about fairness and homeowner protections – have been enacting new requirements that community associations must follow. While each state’s laws differ, the trend is clear: HOAs are being asked to give homeowners more notice, more time, and more options before taking serious actions like liens or foreclosures. Here are just a few notable examples:
- Colorado: In 2024, Colorado implemented a landmark law (building on 2022’s HB 1137) that significantly expands the steps an HOA must take before pursuing foreclosure. All associations are now required to offer a long-term payment plan of at least 18 months to any owner with a delinquency, up from the previous 6-month plan. The law also lays out strict communication protocols: for instance, the HOA must send a notice via certified mail (return receipt) and additionally contact the owner through one other method of their choice (regular mail, email, or text). Effective October 1st, HB25-1043 will add more specifications to delinquency recovery for Colorado-based management companies, including regular reporting to the Division of Real Estate.
- Texas: Texas has likewise tightened its collection timeline. HB 886, which took effect in 2023, requires HOAs to provide a sequence of three delinquency notices over at least 90 days before they can file a lien for unpaid assessments. Specifically, a first notice must go out (via first-class mail or email) as soon as an account is overdue; a second notice via certified mail must follow 30 days later if unpaid; and a third notice 90 days after the initial one if the debt still isn’t cleared. Only after these three notices (over roughly three months) can the HOA proceed with recording a lien on the property. This law essentially standardizes a grace period and multi-notice process statewide. HOAs in Texas have had to update their collection policies to reflect the new required timeline, often involving legal counsel to ensure nothing is missed.
- Virginia: In 2024, Virginia enacted amendments to its Property Owners’ Association Act and Condominium Act that introduced a noteworthy new threshold for foreclosure. Under the updated law, an HOA cannot initiate a foreclosure on a delinquent property owner until the association has secured at least $5,000 in unpaid assessments and fees as a lien against the property. This prevents HOAs from foreclosing for relatively small sums, ensuring foreclosure is truly a last resort. Additionally, Virginia lengthened the validity of HOA liens – once a lien is recorded, it can now be enforced for up to ten years (extended from the previous timeline). The practical effect is that HOAs may lean more on persistent collection efforts and wait longer before turning to foreclosure, knowing they must meet that $5k threshold and can rely on the lien for many years.
These state-specific laws underscore how compliance requirements are growing more complex. Colorado’s mandated combo of certified mail plus alternative contact, Texas’s structured three-step notice cadence, Virginia’s monetary threshold – each state is creating its own checklist for HOAs to follow. And the movement isn’t stopping with those three states. North Carolina, for example, has been considering bills like HB 542 and HB 959 in 2024 that would restrict HOAs’ ability to file liens and change procedures for non-judicial foreclosurestechcollect.ai. Even at the federal level, while not directly about debt collections, the new Corporate Transparency Act requires HOAs (as corporations) to report beneficial ownership info to FinCEN or face penaltiestechcollect.ai – a reminder that regulatory burdens on HOAs are increasing on multiple fronts.
It’s reasonable to expect that similar regulations will emerge nationwide in the coming years as lawmakers respond to constituent concerns. What does this mean for management companies? In short, operating across different states (or even just in one state with evolving laws) now demands constant vigilance. Each jurisdiction may have unique rules about how many notices to send, what they must say, how long a delinquent owner must be given to cure a default, when interest or late fees can be applied, and at what point legal action is permitted. This patchwork of requirements can be incredibly hard to manage manually, and it raises the risk of human error if a step is overlooked. Missing a required notice or deadline could nullify an HOA’s legal case or, worse, lead to liability for the association.
Act Now to Capture 2026 Opportunities
The message for management companies and HOA/COA boards is clear: we are entering a new era where technology will separate the leaders from the laggards in community collections. AI-powered tools like TechCollect offer a rare triple win – generating revenue, reducing delinquency, and ensuring compliance – all while improving homeowner relationships. By automating the heavy lifting of accounts receivable, these platforms free your team to focus on growth and service, and they put money back into budgets that would otherwise be written off or spent on legal fees.
Timing is everything. With 2026 around the corner, now is the time to lay the groundwork for success. Adopting an AI-driven collections solution before the end of 2025 means you’ll enter the new year with a proven system in place – ready to capture those delayed Q4 payments, handle the inevitable January rush of post-holiday delinquencies, and maximize revenue throughout 2026. Waiting until later could mean a full year of missed recoveries and playing catch-up to competitors who acted early.
Think of AI-powered collections not as a daunting new expense, but as an investment in the future of your business. It’s like hiring a tireless, ultra-informed assistant who never forgets a rule or a deadline, never sleeps, and never treats a homeowner rudely. This assistant can boost your bottom line by 10% or more, collect over 90% of debts without a lawyer, and keep you compliant in all 50 states. It’s an opportunity that didn’t exist a few years ago – and one that savvy management company owners are seizing with both hands.
By setting up TechCollect now, before the next budget year begins, you position your organization to capture available revenue in 2026 that might otherwise slip away. More importantly, you’ll be building a foundation of innovation and efficiency that will pay dividends for years to come, in stronger community finances, happier clients, and a reputation as a forward-thinking leader in the HOA space. Don’t let 2026 be the year you look back and wish you had acted – with the right tools in place, it can instead be the year you leap ahead.
