Termination of services for non-payment (dues, liens)

Can I get some opinions/comments on this matter? We have a homeowner who is causing havoac in your HOA because she does not think the BOD should terminate services. We have one homeowner who has quit making her dues payments since July of 2010 and now owes our small 12 unit HOA $7,000+ in past due monthly dues, collection costs, liens, attorney fees. The

The homeowner who I quote at the end of this has never lived in a HOA and her first comment to the BOD when we raised dues was "well if I knew my dues were going to increase, I'd never bought this house". She had never looked at the CCR's, by-laws, rules,etc... until after she bought the house. She rented it a year before she bought it and never once asked about the HOA. She has owned a home in CA and is
in her mid 60's.

From collection policy:

Any delinquent property owner who fails to pay their monthly dues assessments and/or who has been turned over for collection, court action, summary judgment or foreclosure proceedings shall have their services by the association terminated. Including but not limited to mowing, fertilizer, weed control, sprinkler turn-on, sprinkler winterization or any other service provided, etc....."

Homeowner comment - not on BOD or officer of HOA:
"I totally disagree with this paragraph. You have emphasized on numerous documents that the goal for the appearance of the association is to have well-maintained homes. If a homeowner cannot afford to pay their fees, how can they afford to pay for any of these maintenance services? This seems deliberately cruel to me, but I know I will be out-voted by the Association."

Karen:

Have you statred any collection actions on this owner?

Do they have any positive equity in the property?

How did the balance build up to $7,000 I would hope you have filed a lien against her.

One option if you think you have any chance of collecting anything before this owner simply walks away you could cover those costs to maintain the apperance of the property and add that to her balance.

IMO each and every case has to be judged on its own circumstances sometimes you might collect other times best not to throw good money after bad.

Good luck.

Then Karen I wish you good luck with the collections and I would stay away from any property additional costs maintaining her property.

As for the individual pushing for the HOA to take over the lawn care. Ignore them.

I would like to ask what makes this owner "judgment proof" are they in bankrupcy?

Just wondering why you could not move to collect on those liens through the property. Unless as I asked the owner has no equity in the property then nothing to get.

I had a very similar situation. We had a homeowner that did not pay her dues and using the property as rental. They also did not pay their special assessment fee for a special assessment ALL the owner's had to pay. The previous president claimed to have put a lien on the property and had been threatened.

What we did is started foreclosure process. A lien was no good for us because she could continue renting the home out indefinetely. We couldn't stop maintaining the yard as it is attached to everyone else's. Plus our rules we were responsible for lawn maintenance.

We were able to charge the owner back dues, legal fees, and interest. If they wanted to keep the property all they had to do was pay the amount owed plus fees/interest. Only $2K... They choose to fight it and lost.

Here is the tricky part:The foreclosure process doesn't guarantee the HOA the money. The FIRST entity paid is NOT the HOA but the Bank who has the mortgage. IF the owner owes money to the Bank then the Bank is FIRST to get the money. The HOA then is SECOND in line. So make sure the Bank is NOT foreclosing on the owner prior to the foreclosing process for best results. The first bid goes to the HOA for about $1 more than the opening bid of what is owed. This means the HOA has an oportunity to purchase the home. However, this is a BAD idea as this mean the HOA has to pay AGAIN the amount owed to them PLUS takeover the mortgage payments/repairs of the property. If the HOA can't afford house payments/repairs for the property it's best to line up another buyer.

Threats are just threats. There are police for that. Threatening to sue the HOA is just hot air. You sue your HOA your suing yourself.... Plus it's cheaper for the HOA to COUNTER sue any lawsuit. A HOA should NEVER sue a homeowner. Lien or foreclose is a best bet.

The strongest legal ally for a HOA is Liens and Foreclosures. Liens are similar to lawsuit in that they are BOTH "Judgements". However, a lien has more teeth to it as the homeowner can NOT sell their house until the lien is paid off. A lawsuit judgement means the owner CAN run off without paying the judgement and good luck tracking them down to enforce. A homeowner CAN still RENT their property out with a lien on it but they can never sell it with a clear title. Which keeps them grounded to the property.

A foreclosure is a bit more tricky. If a BANK does a foreclosure for money they are owed then if the HOA does NOT have a lien on the property they can pretty much kiss the money owed good-bye. If the HOA does have a lien then when the bank takes over ownership so do they assume the debt and paying dues.

A HOA foreclosure is irregardless to what if any money is owed to a bank. It is based on what is owed them. However, here is the tricky part. If the HOA forecloses the FIRST debt paid is NOT to the HOA but to the bank IF the owner owes the bank. The HOA then gets the leftovers if any. Which can mean the HOA does the dirty work for the bank in some scenerios.

Now IF the HOA does foreclose because the owner chooses NOT to pay back the money owed then the HOA may be able to purchase the property themselves. (Bad idea). The FIRST bid ironically is to the HOA. Which means the HOA has to pay what is already owed to them, legal fees for the foreclosure, assume the loan/mortgage payments on whatever the owner owes, any repairs to the property, maintenance until it is sold, and dues etc... If the HOA thinks it can afford these costs and make a profit then go for it. Otherwise, I would have a buyer lined up so the HOA gets paid. (Still whatever is leftover from the bank).

Keep in mind that each state has different laws regarding when/if a owner can come back and repurchase the property. My state allows a year but owner has to pay the original debt and any improvements made. Depending on the dedication level of the owner they may try this but most don't.

I've done a foreclosure on a property due to dues/special assessment owed. It was worth it in the end to get rid of the owner as they were a blythe to the association. Sometimes you do have to take drastic actions to get the message across. I do want to reiterate that at ANY time during the foreclosure process a Homeowner can simply STOP the process by PAYING the debt owed. It is that simple and no need for the dramatics soo many people put into the process.