The majority of homeowners believe the only time they have to worry about foreclosure is if they fall behind on their mortgage payments, and in many cases they're right. If you live in a condo or your neighborhood is regulated by a homeowner's association (HOA), however, you could be evicted and foreclosed on if you fall behind on your dues. Here's more information about this issue and what you can do to fight back.
HOAs are Legal Entities
Homeowner's associations are legal entities typically established by the developer who built the homes in the area. In addition to creating and enforcing community rules, HOAs collect monthly dues and special monetary assessments for one-time expenses (e.g. new roof for the condo building) from the residents. This money is used to maintain the community or condo building and pay the people who run the organization.
HOAs are regulated by local and state law. In exchange, these entities are granted certain rights when it comes to collecting money owed by residents. Specifically, an HOA can put a lien on a person's home when he or she falls behind on dues. Using this lien, the HOA can then file to have the homeowner evicted from the premises and force the person into foreclosure to collect the delinquent amount.
This may seem like an extreme way of going about collecting a debt and, likely because of this, many states require the past due amount reach a certain level or the homeowner be at least a few months behind before the HOA can file a lien against the home. In California, for instance, you must owe a minimum of $1,800 and be past due at least 12 months before the HOA can foreclose on you.
Fighting Back Against HOA Foreclosure
Just because an HOA has initiated foreclosure doesn't mean it's a done deal. There are several defenses you can use to stop the process and reclaim your home. One defense is the HOA charged you an unreasonable amount of interest, fines, or late fees. For example, the monthly fee is $350. However, the homeowner's association charges you a $1,000 late fee for every month you are behind. The court may feel this is unreasonable and either recalculate what you owe or throw the case out altogether.
Another defense is the HOA may have asked for an unauthorized fee. Homeowner's associations will often issue special assessment fees to pay for one-time expenses associated with something the community needs. However, the assessment must adhere to the HOA's governing documents. If it doesn't, they are essentially asking for money they're not supposed to receive, and the court will dismiss the case or rule in your favor as a result.
There are many other things you can do to stop the HOA from taking your home. Contact a foreclosure attorney, such as Jeffrey S. Arnold, Attorney at Law, P.C., for more information or help with your case.