Can a Renter pay HOA fees of a delinquent homeowner?

Started by GlenL • 33 replies • 5237 views

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GlenL (Ohio)
Posts: 5,491

Posted:

We have an owner in our community who rents his unit out. The people in there have lived here for a couple of years and we have had minimal problems with them. Now the owner is three months past due with his assessments and we have filed a lien and if he doesn't get current foreclosure is not far off.

I feel bad for the people but haven't warned them because: A. They are renters. & B. While we (the BOD) do not comment publicly on anyone's status, but we have told homeowners if they want to know who we've filed on; the information is on the county court web site here in Ohio.

My question du jour: In an apartment building where utilities are paid by the landlord, if the landlord doesn't pay the utilities and they are about to be shut off. The residents can legally pay the utilities to prevent disconnection and deduct it from the rent paid to the landlord. Would we be allowed to do the same thing? Of course if he's not paying us, chances are he's not paying the mortgage either.

Studies show that 5 out of 4 people have problems with fractions

hoatalk (California)
Posts: 603

Posted:

Interesting question.

It seems anyone could pay the fees..the homeowner's friend, brother, mother, etc. If the HOA or MC gets a check saying 'apply to account XYZ' I don't see how they could refuse it.

The big question is 'Can the HOA tell the renter that the homeowner has not paid the HOA fees?'. I'm no attorney, but my guess is no, since it would be revealing personal financial information to a 3rd party.

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BeckyV (Michigan)
Posts: 43

Posted:

Check your covenants and state laws. Ours very clearly say that the association can direct the renter to pay a portion of the rent to the assocaition to cover the association fees without being held in arears of rent to the landlord.

BradP (Kansas)
Posts: 2,640

Posted:

Its money, should it matter where it came from?

CharlesW1 (Georgia)
Posts: 826

Posted:

GlenL,

I’m not an expert in this subject matter by any means, but I too would have to agree with the majority of the replies thus far.

Being a board member, I wouldn’t care at all where the money is coming from, As long as it was being paid.

What if the landlord paid his assessments with illegal (stolen) money? The association or MC has accepted payment at the time, not knowing the money had been stolen. Same difference!

Keep us posted
Chuck W.

Charles E. Wafer Jr.

RogerB (Colorado)
Posts: 5,067

Posted:

Glen, paying utility bills that other people owe will not necessarily prevent the owner from requiring payment for all of the rent. That risk needs to be considered unless you have a signed agreement with the owner.

If I were that renter I would want to know what was going on so I could make a decision on what action to take. How would YOU go about legally warning the renter?

HaroldS (Arizona)
Posts: 906

Posted:

Your legal contract is with the owner, not the renter. As I'm sure the owner has a contract with the renter. Why do you think you have the right to contact this renter with the owner's delinquent status? If this "good" renter does pay and deduct your dues from the rent, they can be evicted for not paying the full amount of the contract rent. So perhaps you'll gain a few months of dues, but loose a good renter member of your community.
Why do you assume, and publicly state the owner is probably not paying his mortgage?
Can you really begin foreclosure after 3 months in Ohio? Harold

HaroldS (Arizona)
Posts: 906

Posted:

HaroldS (Arizona)
Posts: 906

Posted:

HaroldS (Arizona)
Posts: 906

Posted:

So sorry. Harold

DwightT (Idaho)
Posts: 664

Posted:

This whole thing sounds like a possible losing situation for the renter. If he is notified about the past due fees, pays them and deducts the amount from his rent, he faces possible eviction from his home by the owner for non-payment of rent. If he is not notified, the owner continues to not pay and the HOA forecloses, the renter still faces possible eviction from the new owner.

Since liens are public record, would it really be a problem to at least suggest to the renter that he check the status? At least that way he could try to work something out with the owner and avoid losing his home.

WilliamT (Arizona)
Posts: 489

Posted:

Perhaps the advice of an HOA attorney would be in order for this issue.

The HOA cannot disclose personal financial information without facing a potential lawsuit, at least that's the case in AZ.

The HOA has no legal business interest with the renter. Everything must go through the owner.

The renter has a lease with the owner, and if the house is foreclosed, then the renter has a breach of contract, and possible fraud case against the owner.

Don't get the HOA in legal trouble by discussing things with the renter. Contact an attorney, and if the attorney deems it advisable, then the attorney can send a letter to the renter.

GlenL (Ohio)
Posts: 5,491

Posted:

Becky, the covenants are silent on this point, but I will check on the law, Thanks.

Charles, I don't care where the money comes from either. My question is more aimed towards should we warn the renter a sandbag is about to fall on them, when we normally do not publicize delinquencies: especially with some of the court rulings concerning HOA's and the Fair Debt Collection Act.

Roger, in Ohio a utility can post a notice advising the residents of an impending cut-off and there is a legal way for them to pay the utilities and deduct it from their rent without making them vulnerable to eviction by the landlord. As far as legally notifying them, that was kind of the point to the question. I printed out the information from the web site and it might accidentally fall out of my pocket near their home.

Harold that was the reason for the post I don't know if I can legally notify them without exposing the Association to action from the delinquent homeowner. I said chances are, not probably and experience has taught that if the assessments aren't being paid usually the mortgage isn't either. When we do have to foreclose it is usually a toss up who files first us or the mortgage holder. The delinquent homeowner hasn't paid so far in December which will be month four and if he doesn't pay by February that will be five months and we will start foreclosure.

William I think your right, since we use the attorney to collect past due accounts and the homeowner is responsible to pay all legal fees connected with the collection, we'll let him decide

Studies show that 5 out of 4 people have problems with fractions

KennyD1 (Texas)
Posts: 51

Posted:

I would say NO cause as you mention before you don't want to release information about the owner to the renters about his/her money problems. I don't think that what a renter does with paying the electric bill if the electric gets cut off is the same as HOA dues. Now if the renter mails in to make a payment then go ahead and cash in baby! But, don't release information about back payments due to the rent only the homeowner. Even though that you might like the renters, it the homeowner that decides who going to live in that home. You can never tell, one day that renter might just up and move out overnight.

BrianB (California)
Posts: 2,820

Posted:

maybe i am just used to being a bit "less than legal" and finding alternative solutions, but wouldn't a single, computer printed and addressed letter, with no fingerprints on it, anonymously mailed to the renter solve the problem of letting them know the dues aren't paid? then, let the renter figure out what they want to do, and what risks they wish to undertake.

If you wish, send me an email with their address and info, and I will print and mail it for you, handling it with latex gloves and printed on an untraceable, community printer. I will also destroy the email and all associated electrons from my computer.

basicaly, tell them a sandbag is coming, and move on...

BradP (Kansas)
Posts: 2,640

Posted:

Glen:

No, you should not discuss with the rentor. As others have said your business is with the homeowner. Now, if the homeowner tells the rentor and the rentor shows up with money, gladly accept it and move on to other business.

RonaldW (South Carolina)
Posts: 901

Posted:

Posted By BrianB on 12/20/2006 8:44 PM

maybe i am just used to being a bit "less than legal" and finding alternative solutions, but wouldn't a single, computer printed and addressed letter, with no fingerprints on it, anonymously mailed to the renter solve the problem of letting them know the dues aren't paid? then, let the renter figure out what they want to do, and what risks they wish to undertake.

If you are on a BOD of an HOA, being a bit "less than legal" is not a good idea no matter what the situation or issue. There are many folks out there trying to find fault with your HOA and BOD. As an officer of the HOA, you are held to a higher standard than the members.

It really doesn't matter who actually pays the assessments, only that they are paid. That said, the BOD and it's members have no business discussing the financial situation of a menber with anyone outside the BOD.

Ron
SC

BrianB (California)
Posts: 2,820

Posted:

Ron, I don't disagree with your last statement, not at all. But you made a statement that made me wonder: "as a member of the BOD, you are held to a higher standard..."

I can probably believe that many people think/feel that. Presidents of an HOA are held to a higher standard than members, etc..

But why? Is that right to do? Why is a person "suddenly" accountable to a higher set of standard than they were two minutes before, just because they became elected? WHat are the standards? I know in my HOA, there isn't a list of "higher standards" for our board to aspire to. Why aren't board members held to the same standard, why is there a thought that there are some higher plane of standards? After all, I didn't take an oath, or make any promises when I got the job. I never agreed to suddenly be of a higher moral plane than my neighbor...

Is there any legal backing for this? Or just a quirk in human nature, that we perceive folks in such positions to have a higher set of standards to answer to?

RogerB (Colorado)
Posts: 5,067

Posted:

Brian, Board members do have a high standard. And yes there is a legal backing - they have a fiduciary responsibility since they are responsible for the functioning of the association and handling of the association's assests. One reason for incorporating is to protect the officers and other Board members.

BrianB (California)
Posts: 2,820

Posted:

Roger, any idea where i can find the standards? I even throw the term "fiduciary responsibility" around myself, and I kind of know what I think it means, but if pressed, I actually have no idea what they exactly are...just a general vagueness. Is there actually a list of them? Is there a list of legal things that as a board member, one is suddenly required to do (ie, the higher standards), a list of responsibilities moral and ethical, that one must acquire?

i am not trying to be sarcastic, this thread of thought has made me realize I honestly don't know as much about the subject as I probably should...

WilliamT (Arizona)
Posts: 489

Posted:

Brian,

My interpretation of higher standards would be for the board members to set an example for the community.

If the board members educate themselves with the state and local statutes, and the governing documents and have a good working knowledge of these documents, then they are already lifting themselves to a higher level. They are now in a better situation to help run the community business. They should also continue to educate themselves in HOA operation.

Then there is the manner in which the board members conduct the affairs of the community. To operate at a higher level, I believe the board members should work for the community as a whole, and never work on a personal agenda. (That is something that will benefit only the board member or a small minority in the community)

They should enforce the covenants evenly and fairly and be willing to consider the current situation of any violator before getting into a lein or foreclosure situation. They should be willing to work with each violator on a personal basis to work out differences so that both sides win.

If a board member is in violation of a covenant for any reason; such as dues arrears, grass not mowed, etc, the violation person should send a violation letter to that board member just as they would any other homeowner. The board member receiving the violation should thank the person for sending the reminder, and take care of the problem immediately. Board members should never receive special treatment by having violations overlooked.

However, to set a higher standard for themselves, the board members should set an example to the community by not getting into a situation that would be a violation of a covenant. But no one is perfect, and sometimes people get sick or go on vacation and things don't get done. So if the violation does occur, then get it taken care of.

RogerB (Colorado)
Posts: 5,067

Posted:

Here is a definition of a fiduciary: An entity holding assets for another party, often with the legal authority and duty to make decisions regarding financial matters on behalf of the other party.

GlenL (Ohio)
Posts: 5,491

Posted:

Brian, in many if not all states the statutes that govern officers of a non-profit corporation apply; especially in matters of finance. There is an excellent document outlining a book of governance to add to the CC&R's (A code of ethics for Association Boards) on the HindmanSanchez website. I am in the process of adapting it for our Association and have posted the file below.

As I look at the postings of some of the crazy stuff some Associations go through; I consider myself very fortunate, because the problems we have are minor in comparison. Not that we haven't had our share of "creative" BOD members who thought they could do as they pleased. That was one of the reasons I ran for the BOD to put a stop to it. Two of the worst were always President or VP and pretty much did as they pleased but one couldn't run due to health issues and we voted a new President and I became VP. The remaining one was moved to member at large and because he has spent the last two years without any real say in what was done, I understand he's not running this time.

This Board has always tried to act in the most aboveboard manor. We opened the BOD monthly meetings and actively encourage participation; we had the first reserve study done and have several "Open Forum" meetings each year where homeowners are invited to bring up any problems or concerns.

I took over and updated the newsletter, now we tell homeowners everything that's going on except privileged matters, before it is done and invite feedback. I also include updated financial information in each one, but we will not always be in charge and this book of governance will act as our Association's Bill of Rights. Not only will this will tell homeowners exactly what to expect from the BOD, it will tell future Board members exactly what is expected of them.

Like parenting there is no real guide book to becoming a member of the BOD, in most Associations the qualification for running for the Board is to be a member in "Good Standing". And people get on the BOD with no real idea of what is expected of them or how to comport themselves. They only have prior BOD's and their own reconceived notions to go on; I think this will solve those problems. IMHO

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Studies show that 5 out of 4 people have problems with fractions

RonaldW (South Carolina)
Posts: 901

Posted:

Posted By BrianB on 12/22/2006 4:49 PM

Ron, I don't disagree with your last statement, not at all. But you made a statement that made me wonder: "as a member of the BOD, you are held to a higher standard..."

I can probably believe that many people think/feel that. Presidents of an HOA are held to a higher standard than members, etc..

But why? Is that right to do? Why is a person "suddenly" accountable to a higher set of standard than they were two minutes before, just because they became elected? WHat are the standards? I know in my HOA, there isn't a list of "higher standards" for our board to aspire to. Why aren't board members held to the same standard, why is there a thought that there are some higher plane of standards? After all, I didn't take an oath, or make any promises when I got the job. I never agreed to suddenly be of a higher moral plane than my neighbor...

Is there any legal backing for this? Or just a quirk in human nature, that we perceive folks in such positions to have a higher set of standards to answer to?

Brian, several people answered before I had the chance to and they basically said what I would say. Some said it better.

You're dealing with other people's money, you have to be more carefull than you might be with your own. An example would be to get competetive bids for contract work rather than hiring the first contractor you find in the phone book.

You're dealing with issues that can affect the entire association. Your decisions could have negative effects on the association. You could get your association sued.

You have to be completely fair and above board. An example is that you don't give contract work to your brother in law unless it can be clearly shown that he has the lowest bid. Another is that you don't buy equipment with association money and then use it for personal purposes.

And - you must remainin control of your emotions. You may find yourself at a membership meeting having a discussion with the resident troublemaker. You must remain calm and composed when you would really rather take him outside and beat the cr## out of him. ;)

Obviously, some board members do not attain that higher standard. You can tell from all the complaints on this forum.

Ron
SC

BrianB (California)
Posts: 2,820

Posted:

thanks for the replies... I think one of my "thought problems" on "higher standards" is that I don't think of much of that as "higher"... i consider that ALL homeowners should be frugal with other people's time and money, be fair, impartial, and considerate, etc. as a basic standard... To me, that is the baseline. So, i wondered what "higher" was.

Also, i have the reverse idea, that if being "fair and open minded" is a HIGHER standard, then the base standard is to not be fair and open minded... and as above, i don't think it is proper to say that the average homeowner has a base standard to be close minded and unfair.

I see that much of it is semantics, and the way I think about words, sometimes too literally. Thanks!

BillyH (Georgia)
Posts: 9

Posted:

As a member of the Board for a condominium HOA, our water and trash service is part of the HOA fees. Our bylaws allow for disruption of water for non payment. We have now instituted a method of notice to disrupt service addressed to the owner by certified mail and one to be delivered to the unit as they will suffer the disruption. The one delivered to the unit is also addressed to the owner, not the tenant.

CathyG (Arizona)
Posts: 10

Posted:

What if the renters were real pains, then would you want to withhold this info? That puts you in the role of playing God, and that is not the purpose of the HOA.

Follow the rules. Life is rough.

DwightT (Idaho)
Posts: 664

Posted:

Glen - how did this turn out with your renter? We are now in a similar situation, except that in our case the renter is already fully aware that the dues have not been paid. The problem is that the owner apparently lives in Russia and is very difficult to get in touch with. The renter has been there for a couple of years and they are model members of the community. However because the dues have not been paid, we have had to deny them access to the community swimming pool.

IMO, the rental management company should be taking care of not just collecting the rent payments, but also ensuring that things like the dues get paid. This is a new MC, and they don't seem to be very responsive to either the renter or to us. Since these renters already know about the issues, would it be wrong to suggest that when they renew their rental agreement they include a clause that will allow them to pay debts against the property and deduct it from their rent?

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I don't believe you can enforce an ownership punishment/restriction onto an renter. You can't restrict the renter's use of an amenity just because the owner hasn't paid their dues. It's not the renter's responsibility and they can't control the fact the owner hasn't paid the dues. They can't pay the dues for them.
The HOA CAN place a lien or start foreclosure on the OWNER of the delinquent property. That is what the HOA is legally responsible for enforcing against non-payers. If the homeowner is in danger of losing their rental property or knows they can't sell their property without paying a high bill, they should pay up. That interupts their business and they should respond.
I recently testified in court on a case involving a house we foreclosed upon due to non-payment. The owner had a Rent-to-own contract with a renter. The owner tried to make the renter responsible for the dues. Even sent the HOA a letter stating as such! It's whoever's name is on that deed that is responsible for paying the dues. That is NOT the renter's. The HOA foreclosed on the house and the renter was suing to get their down payment back from the owner. The renter won.
It's the OWNER's responsibility to make sure their tenant keeps the rules abided and the property in good condition. The HOA is a third party outside of the owner/renter contract. They can report the information to the owner if they feel it is necessary.
We never restricted the renters from any of the amenities or common property despite the owners standing. The renters weren't allowed to vote or participate in any of our meetings. Any renter problems, we dealt with through the owner or through the police department. I've had to restrict renters from the pool area not because they were renters, but because of their behavior. It would have been the same with any bad behaving owner as well. Remember there are "Renter's rights". So be careful where you tread.

Former HOA President

DwightT (Idaho)
Posts: 664

Posted:

There is no question that we can suspend a renter's access to the pool if the owner hasn't paid the dues. It's part of the whole chain of agreements. Our agreement is with the owner, and if they don't keep up their end of the agreement, then as part of the contract they lose their access to the amenities which means that they don't have the ability to pass that privilege on to their renters. It wouldn't really be fair to other homeowners if we enabled the pool access code for this property just because it isn't the owner living there.

In this case the renter is in agreement with that. They just wanted to see if they could work something out with us. As it turns out, once we were able to get in touch with the new rental management company, they told us that the dues would be paid out of the next rent payment. They just had never received the invoice for the dues.

CharlesW1 (Georgia)
Posts: 826

Posted:

MelissaP1,

Perhaps I’m wrong in my thought process. Please explain to me why “You can't restrict the renter's use of an amenity just because the owner hasn't paid their dues”

This is my first year as a board member, and we have always restricted the use of the amenities based upon delinquent accounts, regardless if their renting or a homeowner.

I feel that they “renters” always say they don’t want to be treated differently. In my community that is what we hear often.

We also have to have written or verbal authorization from the landlord, for his/her tenants to use any of the amenities. The Lot owner is ultimately responsible for any damages done to HOA property while in use.

Please clarify this for me. My board and I have may have been operating improperly.

Chuck W.

Charles E. Wafer Jr.

JohnC10 (Arizona)
Posts: 106

Posted:

Does that reek of sarcasm or what?

MikeS1
Posts: 668

Posted:

Charles - I totally agree with you, but what I haven't heard here in this post are any comments about what their HOA docs actually say about the subject. We also have one situation where the owner is difficult to reach and the renter has twice paid the HOA arrearages just prior to when the lien was filed. He didn't find out about the problem until he received a notice that his parking, pool, and tennis privileges were suspended. I also think that the landlord/tenant commission and County consumer affairs office would frown on a landlord that evicts his tenant based on the fact that the tenant had deducted these fees from his rent.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

It's complicated so I will try to explain the best I can. The agreement about living in the house is between the owner and the renter. It's NOT with the HOA. The agreement between the HOA is with the owner. The HOA can NOT enforce it's rules against the renter because they don't have an agreement with the HOA. However, the renter is to be informed of the rules/regulation by their owner and agree to live by them as condition of their rental agreement. If the renter fails to live by the rules, the HOA can inform the owner of the rule violations or hold the owner responsible for any damages caused to the HOA's property. They can't hold the renter responsible for any damages done to the home itself. That's an issue the owner has to be responsible for themselves.
Confused? I am too. Let me clear it up a bit. Have you ever gone to a bed and breakfast? At a bed and breakfast, a person usually "rents" a room for a weekend or week. They don't own the home and there are certain household rules to follow. The B&B does have beach access in which the homeowner's pay for on a "exclusive" beach. It's an area of beach where the other group of area owners have agreed to fence off just for their use. All the owner's have to pay to participate. The B&B your staying at is in the middle of this area. A few months prior to your visit, the B&B's owner's have refused to pay their share of the "beach" fee. You don't know this but have the understanding you are to have beach access. Are you going to pay the owner's bill once you get there so you can use the beach? No. You have the right to use that beach since it was part of the agreement you entered into. It's NOT your responsibility for the B&B's owner failure to pay their bills. The other owner's in the exclusive beach agreement is responsible for holding the B&B owner's responsible. The B&B owners if they want to keep giving their "renters" access and not suffer false advertising charges, has to pay up. Otherwise, the B&B's owners are going to have to deny their renter's access to the beach due to their non-payment, and who's going to want to rent from them any more?
Just translate this example into a HOA situation. The "exclusive beach owners" are the HOA, the owner is the B&B's owners, and the renter is the one expecting the access. Do you see where it may not be the HOA's responsibility to deny access to the amenities? They have to force the owner into paying so the owner will be the suffering party by having a continued lien or their house taken away in foreclosure? A lien will make the owner keep owing money to the HOA until they are ready to sell the home. That could mean a high bill for the owner in the end. The HOA can foreclose, which means the owner will have to kick out their tenant if they lose the home. The owner can't rent what they don't own.
So basically, you can't really hold a renter responsible for the failure of the owner since the renter isn't part of the agreement with the HOA. The HOA can put a "kink" into the homeowner instead by liening or foreclosing. A much stronger effect than saying they can't go to a pool they aren't even living by.

Former HOA President

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