What is a collection?
Collection in real estate terminology refers to debt collection. The debts liable to be collected can be:
Tenant related debts
Debt collection involves issuing reminders, creating debt repayment options and schedules, debt negotiations, or even lawsuits. Many property owners and financial institutions often hire debt collection agencies to handle the collection of rents and mortgage loans. This approach reduces the burden of managing many tenants and ensuring their rents are paid as at when due.
Agencies who engage in the collection of debts or rents on behalf of landlords or property owners do so for a commission and/or percentage of the collected debt.
Collection in the real estate industry is also subject to the provisions of the Federal Debt Collection Practices Act (FDCPA) unless it is done directly by the landlord.
Collection also involves putting pressure on the debtor to pay within the period set as a deadline. Failure to pay within the timeframe may result in a foreclosure of the mortgage, higher interest, or a lawsuit to recover rents or outstanding debt.
There are standard debt collection agencies that specialize in collecting real estate debts.