Strategy for dealing with dues owed to an aggressive HOA?

56 Replies

Hello,

I'm a new member of the forum, and I do have an issue with my HOA that I'd like to discuss. In this situation, I'm a homeowner, and I currently owe several years of HOA dues to the association. For various reasons, and mostly economic, I have fallen behind on the payments. The dues are about $250/year. I owe them around $2500 or so (with interest). I've owned my home here for about 10 years.

Recently, the property management company for the HOA has started to engage in what I can only describe as harassment, for alleged covenant violations on appearance of the property, landscaping, etc. This culminated into two written "final" notices being sent to me, in the past two months. However, there were no initial notices for the same complaints sent prior to the "final" notices. Also, the complaints are not complete. In other words, I'll get a complaint for one issue, and then correct it, and then another "final" warning will come for another alleged issue. These notices are also filled with threats of lien and foreclosure regarding the past due balance, and I think that the reason behind the harassment.

I tried calling the property manager, and he was strangely combative with me. We got nowhere on the phone, and he only appeared to want to threaten me and basically send the message that my property will always be "in violation" until I pay them off.

My thoughts on this , along with much research, is that the HOA dues are thankfully low enough, that placing liens and trying to engage in foreclosure has not been economically feasible for the HOA to do in most cases. According to court records, the HOA has only taken one homeowner to court, and that homeowner wound up winning against the HOA and is still in the home. Due to privacy, I do not know the details of the case. Also, it seems that the HOA would sort of routinely send out notices of intent to lien for people behind on dues. However, in recent years, that has been replaced by use of an outside collections company. The collection company has sent me letters, and they also put a negative mark on my credit. So, I paid them nothing.

I don't want to fight with the HOA, nor do I want to "egg them on", and with these letters and phonecalls I feel I am probably engaging in that, even if not on purpose.

What I'm considering to do is to send a simple written request to the board asking for all alleged covenant violations to be mailed to me, along with a reasonable timeframe to correct the violations. I need to make sure I receive all the violations at once, so I can avoid this "oh and by the way" type of harassment they appear to be engaging in now.

I'm also considering trying to organize a payment plan with the HOA. However, I can't afford to make any large lump sum payments.

I'm also very interested in knowing the current power the HOA may have or not have with regard to my home, liens, and foreclosure. If I do wind up in a serious legal action, I may be able to pay the fees off in total, but I'd rather not do that until that final moment. As I've faced much economic trouble in recent years with the mortgage and banks, I know it's best to save the "emergency cash" for real emergencies.

Thanks for any ideas on the best strategy I could use to start to resolve this problem with my HOA.

Sounds like you are really behind and they are really pissed at you. The violations seem to be just to "get even" with you - or to get your attention.  So, dealing with and negotiating about the violations I think would be wasted time and energy - since it does not address the root issue - your overdue payments. 

Try to negotiate a good faith, honest, best you can afford, that you will stick to, payment plan with them.  I think if you folks can come to agreement AND you keep your end of the bargain, the violations will go away.

That's my 2 cents. 

Originally posted by @Bob C. :

Sounds like you are really behind and they are really pissed at you. The violations seem to be just to "get even" with you - or to get your attention.  So, dealing with and negotiating about the violations I think would be wasted time and energy - since it does not address the root issue - your overdue payments. 

Try to negotiate a good faith, honest, best you can afford, that you will stick to, payment plan with them.  I think if you folks can come to agreement AND you keep your end of the bargain, the violations will go away.

That's my 2 cents. 

I agree with Bob.  I am shocked that they would let you get 10 years behind to begin with, we are not allowed to let a resident go past 12 days in late rent each month without a formal payment plan for example.  Definitely arrange a payment plan, I am not an attorney etc. but non-payment is non-payment and don't see any argument to not pay this.  It is their job to collect. 

The HOA certainly has the right to foreclose, and there's no financial reason for them not to do so. Any attorney fees, probably $2000 would be added to your balance.

In my market many of the HOAs have property management companies that also collect dues. When you don't pay dues, it goes to their collection attorney. The HOA collection attorneys here are very aggressive. They go right to filing assessment liens. Even for accounts only 60 days past due. It's an effective technique as assessment liens are public record and get the owner's attention. If the HOA remains unpaid, they do foreclose on the assessment liens. Even on over encumbered properties where they will get the property back. Again, aggressive and immediate collection practices get attention and let all the homeowners know that there are consequences for not paying dues.

If you are $2500 behind on dues that only $250/year, that's not economic hardship.  That's a choice you are making.  Call them and make a payment plan asap.

Thanks, but the replies so far aren't anything that can't be easily taken from a few google searches and common sense.

Also, I am not 10 years behind on dues. I've lived in the home for 10 years, and made on time payments for the first 4 years or so. The balance may be lower than $2500, and I think they have tacked on lots of fees/interest to inflate it. 

What I have read, is that taking a home from lien to foreclosure for past dues is fairly "expensive" in a situation where dues are not very high to begin with. Also, there is the issue of reasonable court costs and attorney fees compared to the balance owed. I'm friendly with the current and former President, and he just told me that the legal fees are written in the CC&R's , so perhaps they could be unreasonable, and still collect. I'm not sure on that.

Regarding the violations, I might wait a month, and see if they "hit" me again. The major issue at this point seems to be hinging on the old stupid "trash cans from view" covenant. That's something that I've battled with the HOA on just a few times since I've lived in the home, and it's been several years since this most recent complaint. What's bothering me is that my trash cans, when properly placed, are "screened" from view according to the covenants. The property manager, in his rant, claimed that he can go looking for violations on my porch that aren't even immediately visible from the street! Again, I think from a legal standpoint, that's probably not true. It just doesn't sound right or reasonable.

I am surprised they honestly have let you fall behind SIX years. There are folks that will tell you that if you don't pay your mortgage you can live in your house for years for free (lots of that talk post 2008) you will not find that crowd here. While I understand that things come up financially you also have to understand that you are 72 months behind on payments. Of course they are going to nit pick and threaten action. 250.00 breaks down to 20.84 a month. We all can find a way to save 20.00 a month. Use Netflix/HULU over cable. Mow a yard for a neighbor? There is not an easy way out of this like you appear to be looking for. You could collect cans/scrap metal. Buy things at a thrift store and flip them on ebay. Offer to pet sit, babysit, clean/detail cars, rideshare, etc. You can easily pay 250.00 a year. A buddy of mine lives in a condo that he has to pay 500.... a month. Yours is so small this should be a non issue. My advice would be to honestly sit down with the HOA in person. Explain you will not let another 250 go by unpaid. See my above suggestions and start working to pay down your 2500 balance. Why risk your home over something preventable?

If they do take your case to foreclosure, which they are legally entitled to do and HOAs do all the time, then they can tack on the costs associated with that foreclosure.  When I've looked at foreclosure documents here, that's costs are often about $10,000.  Maybe there's some requirement those fees be reasonable in relation to the amount owed, but I don't think so.  The costs of doing a foreclosure are, roughly, the same whether the amount owed is $10K or $500K.  There's a real chance that they could foreclose and take your condo away if you don't sort out something with them.

Sorry if I was not clear. This isn't a condo. It's a home in a neighborhood in Florida. of course, collection activities and procedure are a lot more aggressive for condo's and their assessments as the dollar amount per month is high and can add up quickly.

To date, the HOA hasn't completed foreclosure on any resident in the neighborhood. That's about 450 homes, and I know for a fact that many owe or have owed a lot more than I do. The "rumor" is that they are "working" on foreclosing on two homes in regards to past dues or other issues.However, attorneys are expensive, and the HOA President that never seems to leave is very cheap, and I just found out that for the first time ever they are raising dues because they can't afford to pay insurance , or something like that. So , perhaps the whole lien/foreclosure thing will change soon for delinquent accounts.

My home has been in jeopardy many times over the past several years, and I did go nearly a year without making mortgage payments. The house never fell into foreclosure, because I was able to make other arrangements, participate in government assistance program, and also got my upside down second mortgage forgiven. The point is, the HOA fees were and still are something I can't afford. I may be able to afford very small monthly payments towards the back balance.

I may have been misdirected on this forum, as the audience here seems to be more of a pro-HOA (collections) side, as opposed to defense for a homeowner.

On a side note regarding legal responsibilities for the HOA... there has been a serious and ongoing problem that I have complained about many times to the board and board President regarding traffic and in particular excessive speeding problems in the neighborhood.

This problem is ongoing , and has yet to be remedied. The HOA could, and many surrounding HOA's do, pay police to conduct speed patrols and routine patrols in the neighborhood. However, the current board and President are opposed to paying the police for anything. I've been told there could be liability concerns if someone were to get hit on our streets, but the HOA disagrees. They will set aside over 50K for liability over the various ponds in the neighborhood, but do little/nothing about a danger we face every day and night, and a major nuisance. This constant battle with them has, needless to say, made me VERY reluctant to want to work with them on anything regarding the dues. I feel as if that money is literally going to nothing. Unlike condos, we have what people call a "money pit HOA". They just take, engage in dubious behavior, and do nothing but pay a ridiculous amount of money to a landscaping firm to cut grass and keep up a few "common areas". We have a total of two park benches in the entire neighborhood , and they are located in an area you'd never go , for fear of getting run over by all the speeders and reckless drivers that the HOA does nothing about.

We're much less pro-HOA than we may seem here. I for one would be very, very reluctant to own a house or condo with an HOA. But that doesn't mean we don't understand how they work. My dislike for HOAs stems from how they operate. But whether you like them or not you bought in an HOA controlled community, haven't paid your dues, and are now in conflict with them. Not paying your dues is not the way to make them do what you want. The way to do that is to get on the board and be active in their decisions. Not paying your dues is a good way to end up losing your property. None of this other stuff will matter if they foreclose on you.

Originally posted by @Account Closed :

On a side note regarding legal responsibilities for the HOA... there has been a serious and ongoing problem that I have complained about many times to the board and board President regarding traffic and in particular excessive speeding problems in the neighborhood.

This problem is ongoing , and has yet to be remedied. The HOA could, and many surrounding HOA's do, pay police to conduct speed patrols and routine patrols in the neighborhood. However, the current board and President are opposed to paying the police for anything.

So you haven't paid your dues in 6 years but you're complaining about things the HOA isn't spending money on?

I could understand crying poor if you were in a condo with $300-500 monthly dues but to not be able to come up with $20/month for 6 years is absurd.  There's always something in your life you can cut if you had to save $20/month.

This forum is not pro HOA as you would suggest but it's primarily investors not deadbeats that refuse to pay their bills. Personally I hate HOA's and won't by any investment properties subject to an HOA/COA. If you don't pay then everyone is in the HOA has to pick up the slack so that's bad for everyone else. There's really no reason for them not to foreclose, they will be able to add all of their costs to the judgement. I guess it's possible they just don't have the budget to front he costs but if enough homeowners decide not to pay they won't have a choice otherwise nobody will pay.

Jon,

Of course, I can't disagree with that. However, if they did wind up launching foreclosure, I would probably be the first homeowner in the history of this HOA to wind up in that unfortunate circumstance.

Point is, I think there are reason(s) that the HOA has yet to foreclose on anyone, but has made successful collection efforts via the threat of foreclosure, collection agencies, credit reporting, etc. In a better economy, myself with better credit, and not having already faced losing my home several times, those 95% typical collection efforts of threats and harassment would've probable been unnecessary and/or would've worked well by now. However, as most Americans today, I unfortunately always have bigger problems. As it stands, the bank is far more likely and capable of taking my home than the HOA, because even in the worst case, an HOA debt can be settled. As I understand it , that can also be done before foreclosure proceedings begin. So, unless I'm wrong about that, the bank will get paid first, and then if possible the HOA.

Even though I was a first-time buyer, and know a lot more now than I did then, I was aware of the big problems with HOA's. Around here, HOA-free homes are kind of hard to find. The newer homes in neighborhoods tend to all be under HOA's, and many are expensive. This neighborhood was , at the time, what I thought was a good find. Where surround neighborhood were charging 2,000+ a year and more in ridiculous "CDD's" and HOA fees, this place was only $250/year. I know a lot of the CDD's have expired by now, but the HOA never seem to go away. So, I like to think that I'm not a buffoon that just blindly bought into an HOA neighborhood, and now want to pretend I didn't sign the agreements. I know I did, and I'm still not completely unhappy with my decision, despite all the problems. I'm just trying to find the lowest stress and lowest cost way to deal with them during these difficult times.

It seems like you are taking a large gamble on the fact that they view it as expensive to pay an attorney. Seems it would be more expensive if no one pays as@Patrick L. mentioned. The reason some of the responses may seem a little heated is the fact that a good portion of us on here are landlords as well. These are guys who are used to people having reasons why they can't pay the bills. The general consensus seems to be that you just need to think outside of the box. No legal entity is going to agree with your position that they should fix the speeding so you haven't paid HOA dues for 6 years. (especially given the small sum)

Have you considered investing that $20.84 a month in an Indianapolis turn key property at a 12% cap rate?  I can refer you to someone that has insider access.

Originally posted by @Account Closed :
As it stands, the bank is far more likely and capable of taking my home than the HOA, because even in the worst case, an HOA debt can be settled. As I understand it , that can also be done before foreclosure proceedings begin. So, unless I'm wrong about that, the bank will get paid first, and then if possible the HOA.

The HOA foreclosures in FL are generally far more efficient than the banks. Most HOA foreclosures I see are completed in under a year while many of the big banks can take 3 years. If the HOA completes their foreclosure and the bank hasn't started a foreclosure on the mortgage then a 3rd party bidder will probably snatch your house and rent it out until the bank eventually forecloses and takes it back. In that situation the HOA will recover all of their costs at the foreclosure sale. If nobody bids on it then the HOA would get possession of the property subject to the senior liens and they could rent it out while they waited out the bank and they'd more than make their money back. Either way you're out on the street because you were unwilling to pay $20/month.

I'm sure if it came down to them filing a foreclosure you'd try to find a way to pay but at that point you'd then be on the hook for the court costs and attorneys fees and your bill will have more than doubled.

My advice would be to contact them and work out a payment plan.  If you're paying something every month they're far less likely to make you the first one foreclosed on.  

Patrick,

That's an interesting reply you made there, and I've heard some of it before. I still don't understand how it is at all low cost or otherwise "easy" for the HOA to actually get anywhere foreclosing on a home. More specifically, for the HOA to forclose on something less than say a $5,000 alleged debt. Also , how does the HOA recover costs at a foreclosure sale, if the sale price is less than the amount owed on the mortgage at the time?

@Account Closed  

You misunderstand how an HOA foreclosure works. If the judgment comes out to be say $8k, and an investor bids $8,100 at the auction, he owns it "subject to the mortgage". No money from the sale gets paid to the bank, it all goes to the HOA. Then at some point the bank will start foreclosure, and the investor simply rents the property out while he stalls the mtg foreclosure for 2-3 years. HOA foreclosures are Much faster as there aren't any "prove you own the note, have proper assignments, etc" defenses in an HOA foreclosure like there are in a mortgage foreclosure. HOA foreclosures are very common down here, 3-10 per day, and generally takes about 4-6 mo.s from filing until auction date. Work something out with your HOA. If you insist on the constant battling and nit picking with the HOA, you will lose. We are not HOA/Collections proponents here, we try to be reality proponents.

Originally posted by @Account Closed :

Patrick,

That's an interesting reply you made there, and I've heard some of it before. I still don't understand how it is at all low cost or otherwise "easy" for the HOA to actually get anywhere foreclosing on a home. More specifically, for the HOA to forclose on something less than say a $5,000 alleged debt. Also , how does the HOA recover costs at a foreclosure sale, if the sale price is less than the amount owed on the mortgage at the time?

Here's an example for you. I pulled up yesterday's foreclosure auction docket here in Pinellas and found one to show you what I'm talking about.  In the below example the homeowner hadn't paid the COA dues but the mortgage is not in foreclosure.  The COA filed their own foreclosure to protect their interests and completed it swiftly in 7 1/2 months (filed 4/28/14).  The auction sold to a 3rd party bidder for $5,200 and the COA will get all of that money to cover what they are owed, none if it will go to the bank.  The 3rd party bidder will obtain possession of the property subject to superior liens (like the mortgage).  That new owner will be able to rent out or live in the property up until the bank forecloses on their mortgage.  They could own it for 3 years while just paying the COA dues every month and wait out the bank to take action on their mortgage.  

If the mortgage is current or the bank just isn't foreclosing it is in the best interest of a HOA to move forward with their own foreclosure to protect their interests and recover unpaid funds.

Auction Sold

12/09/2014 11:38 AM ET

Amount

$5,200.00

Sold To

3rd Party Bidder

Auction Type:FORECLOSURE

Case #:522014CC003319XXCOCO

Final Judgment Amount:$7,846.85

Parcel ID:33-30-16-64857-007-0702

Property Address:6301 58TH ST N # 702

PINELLAS PARK, 33781

Assessed Value:$53,710.00

Plaintiff Max Bid:$5,000.00

I'm confused.  You came on here asking for opinions, and now you are arguing against all of those opinions.

You are making a lot of assumptions about what the HOA (and I hate HOAs, by the way) will and will not do, without really a lot of information to support those assumptions.

Let me be frank, and tell you how an HOA board member is likely to see you.

"This Tuco character is really starting to get to me. Hasn't paid dues in 6 years, even though we have the lowest HOA dues in the county. Doesn't maintain the property, doesn't even move the trash cans out of sight like everyone else. And has the gall to complain that we don't spend money on police details, when he/she doesn't even pay! Time to stop putting up with this. Hit him/her with a violation everytime you see one, and if the dues aren't paid, I don't care that it might cost us a little up-front, time to remove this cancer on the community."

Actually, you'd have to throw the phrase, "Preserve our property values" into the above quote approximately 10-12 times, because HOA board members have a fixation on preserving property values (something mostly not within their control) that borders on the absurd. But you get the idea.

You're a problem, from their perspective.  They have a perfectly legal, fairly easy way to deal with that problem.  The last thing you want to do is tee them off any more.

Try to make a payment arrangement. Stop fighting with the PM staff.  Move your trash cans (which doesn't cost you anything) rather than arguing about how easily they can be seen.  Stop complaining about speeding cars or anything else.

Wayne,

Well clearly, HOA foreclosures are not that common around these parts. That's why I was asking...

Also, we've had the inevitable increase in rental properties in the neighborhood. The general consensus is that they are usually among the "worst" in the neighborhood , and more importantly the investors don't always pay the dues. 

I asked an attorney I used to hang out with what the entire goal was being the liens and the foreclosures regarding HOA dues. He said they simply want to get someone in the house that WILL pay the dues. The plan you layed out sounds more like they might break even on their court/attorney costs, and getting someone in there to actually pay the dues is a big maybe on both when and if. I could see all that making sense for large alleged debts, but not for something less than 5,000. Even so, I am going to approach the HOA with a payment plan in January. It will be very low (about $10 or $15 a month). Hopefully, they will accept it, and I can get my bank to send them a check every month.

They also make sure their interests are protected from the bank that holds your mortgage, which you have admitted you have problems with.  I'm actually astounded that they have not foreclosed on you already.  

Richard,

Thanks for the amusing response :) You are probably right about most of that. However, I pretty much just talk directly to the President about the speeding problem, so the rest really don't see me as a complainer to the board ... at least not yet. I used to be active with the board, but figured when I fell behind on payments, that would just draw unneeded negative attention by them, as you pointed out.

The President and me both share a big concern about the speeding problem, and he has personally helped get us some remedies in the way of signage and other things. We just disagree on what more needs to be done. As far as never complaining about speeding again ... that won't likely happen. I view the speeders in the neighborhood as a constant threat to my life, and more importantly now the life of my child who is now a toddler. It's so bad , that I am installing door closers and constantly checking for fear my boy could get out of the house, and walk just a few steps to what is basically a glorified interstate expressway next to my house , legally referred to as a "25 MPH neighborhood street with no center line"

In fact, I recently told the President, I'd dig into emergency funds and pay the entire balance off if he could get the board to install four way stops and start paying for speed patrols at least once a month. Didn't appear to be "worth it" to them at all. That might be the same reason why 40+ homes allegedly haven't paid dues in a long , long time .. and some allegedly have never paid a dollar to the HOA.

Wait, you have emergency funds that could cover your past due balance?  And you're not paying them?  No wonder they hate you.

Look, this is an emergency.  It could result in you losing your house.  For real, no matter how determined you are not to believe it.

Pay your dues.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.