Being sued for unknowingly missing HOA payments

13 Replies

Hello,

I am a new investor having purchased my first property in Cordova, TN a year ago and a half ago. It turns there were annual HOA dues for the property I didn't know about. The closing attorney, property listing, and real estate agent did not mention it. Being my first property, I didn't know to look for it on the closing statement. I have not received any HOA paperwork, fee requests, etc.

A few months later, I receive a notice of lien which I didn't understand at the time. And a few months later I received lawsuit charges, a lien charge, a fee for debt collection, and hoa fees all for a sum of over $1,200. Also when looking back on the closing statement, it indeed mentions HOA fees for $230, however it is $335 on the lawsuit statement.

I spoke to the HOA and law office that I have never seen any paperwork or fee requests about hoa dues, aside from the notice of lien and lawsuit charges. It doesn't fair to me that I am being sued for something I didn't know about. They claimed that the HOA sent me statements, but I have not seen any. They said my only other option besides paying the full charges is to dispute it in court. Do I have a case if did that? Would the cost of taking it to court be worth it? Is there any other way around the fees at this point?

Advice would be greatly appreciated. Thanks!

Angie

@Angie Lai here in Pittsburgh we have to get whats called a resale certificate before selling any property that has a legitimate HOA. Check with your closing company and your agent and possibly your title insurance if there are any back HOA fees owed before you bought it. In the meantime you need to take this as a lesson and be more careful and pay those fees off. You dont want them to accrue interest and late fees etc...

Not knowing about something is no excuse in court, so attempting to use that before a judge will not go in your favor.  

The HOA's existence and the existence of the fees would have all been disclosed to you. The fact that you didn't know to look for it is, again, not an excuse. While your agent should have pointed it out to you (and you might have a claim there, depending on your local rules and laws), it would have been your duty to request HOA documents from the seller to make sure that you were buying property in a financially viable HOA and one in which you can abide by all the rules.

In some states (I am not sure about Tennessee), the HOA has no duty to bill you for dues. It is your obligation to know that you owe them and pay them.

You have two choices:

1.  pay the fees, fines and legal costs and make sure you understand their billing policies and procedures going forward.  Also make sure they have your correct address going forward since it seems like, if they were billing you, you were not receiving them.

2. if a lawsuit was already filed in court and the HOA won, find out how and when they served you with the lawsuit. In many states (and again, I'm not sure about Tennessee), they have to personally serve you, which means they must physically hand you court documents. In other states, sending certified mail or posting on the door is adequate. If you think the service was improper, then that's really the only aspect that you can fight in court. But ultimately, the Dues, the Fines and the Legal Fees will all need to be paid anyways, so you're really only delaying the inevitable with this tactic.

The next thing you need to do is get copies of the governing documents of the HOA. These would be the Declaration, the By-Laws, the Covenants and the Rules & Regulations. Read through them very carefully because these are all rules that you MUST follow since you own property in an HOA. Ignorance of these rules will not be a viable defense in the event you are ticketed or fined for breaking the rules. These rules can include anything from what colors you can paint your house, how many cars you can park in the community, what condition the cars must be in, what restrictions there are on lawn length and type of landscaping you can have, whether or not you are permitted to rent out your house, etc.

Have you had a conversation with your agent and/or his/er broker? Its possible that you did sign an HOA Disclosure/Resale Cert with the contract but you just don't recall it - they would have it in their records. If they truly didn't disclose the HOA to you then you could consider filing a complaint with the TN Real Estate Commission. Here in Maryland the Commission maintains a Guaranty Fund (https://www.dllr.state.md.us/license/mrec/mreccomp.shtml) to compensate clients for oversights like this that cause financial harm.

Originally posted by @Angie Lai:

Hello,

I am a new investor having purchased my first property in Cordova, TN a year ago and a half ago. It turns there were annual HOA dues for the property I didn't know about. The closing attorney, property listing, and real estate agent did not mention it. Being my first property, I didn't know to look for it on the closing statement. I have not received any HOA paperwork, fee requests, etc.

A few months later, I receive a notice of lien which I didn't understand at the time. And a few months later I received lawsuit charges, a lien charge, a fee for debt collection, and hoa fees all for a sum of over $1,200. Also when looking back on the closing statement, it indeed mentions HOA fees for $230, however it is $335 on the lawsuit statement.

I spoke to the HOA and law office that I have never seen any paperwork or fee requests about hoa dues, aside from the notice of lien and lawsuit charges. It doesn't fair to me that I am being sued for something I didn't know about. They claimed that the HOA sent me statements, but I have not seen any. They said my only other option besides paying the full charges is to dispute it in court. Do I have a case if did that? Would the cost of taking it to court be worth it? Is there any other way around the fees at this point?

Advice would be greatly appreciated. Thanks!

Angie

Caveat Emptor - Buyer beware. As a buyer its your responsibility to know it. If you didn't see the statements in the mail, you need to pick up that phone and call the HOA and ask them to look into your account.

I had a similar case a couple of yrs ago when I bought one of my properties. I knew there was an HOA, and was expecting some form of welcome package in the mail. Didn't get it the first month. Got on the horn with the lady in the office, only to find out they send one when the first bill is due, and since the seller had paid for my HOA dues until the end of the year, I wouldn't receive one until the beginning of the following year.

Mark this up to lesson learned in every aspect of your life.

Ignorance is definatly no excuse and definatly not a defence. Pay all yu owe and move on.

@Angie Lai, @Linda Weygant provides you some solid advice. As previously serving on a HOA board (eh, dreadful), essentially what the HOA wants is to pay the dues owed. Keeping up the common areas of your community is/can be costly and if a quality HOA, they follow a budget that is supported by everyone paying dues. PLUS, depending on the state of your property, there are typically State supported Statues that give the HOA authority. With your signature on the closing statement a case can be made you were aware of the HOA. In my no legal, entertainment purposes only opinion, best course of action is to get current with your HOA and move on. Best of luck!

Thanks everyone for your replies! It's helpful. 

Lets say they actually had not sent me any paperwork or statements regarding the HOA. Would that matter at all in court?

Originally posted by @Angie Lai:

Thanks everyone for your replies! It's helpful. 

Lets say they actually had not sent me any paperwork or statements regarding the HOA. Would that matter at all in court?

Good luck proving they didn't send anything. Even if they didn't, it appears you still owe the money so what's the point? Settle it up and move forward. 

It's amazing to me how many people purchase in an HOA, don't read all of the documents ahead of time, and then are shocked when they get blindsided by something. Read every word and avoid any future surprises.

Always use a lawyer when buying/selling real estate!
Originally posted by @Michael Ablan :
Always use a lawyer when buying/selling real estate!

 Lawyers are typically not used on real estate transactions in any of the states where I have lived (Kansas, Arizona, and Nebraska). Everything is done through real estate agents and title companies.

@Anthony Gayden   Good point.  I forget that.  We are pretty much forced to use them in NY, which has it's own + -.  

I highly doubt you need to bother with going to court. Simply go to your HOA office and make a payment. While there, you can try and negotiate/ask some of the extra fees away, but really, this is not their fault. Just pay it up and move forward.

@Angie Lai I have been successful at times negotiating HOA fines etc down for clients. You need to be ready to pay the negotiated amount once you settle.

Plead your case outside of court and negotiate in good faith towards a settlement.

I would guess the other option would be to go to court and have a really solid chance at losing.

Sorry, you weren't noticed properly!

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