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Notice to Mortgager of unpaid HOA dues.

Started by MartyD • 35 replies • 6486 views

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MartyD (Florida)
Posts: 43
Posted:
Has anyone here on a HOA board ever used this tactic to get the members holding out to pay up. Every Mortgage has a clause that states that it is the members obligation to pay any and all HOA dues, fines etc. to prevent an action by lien being filed against the property. A simple public document check of the person and property reveals the Mortgage company to be notified and the mortgage co. in turn takes care of the dirty business that most HOA hate...Collection of Unpaid Dues...They make sure the member pays or they pay it for them and add it to the unpaid balance of the mortgage or start a new escrow account to make these payments for the mortgagee...neat little trick that takes the stress out of volunteer work.
LindaC3 (Florida)
Posts: 526
Posted:
MartyD-- this issue had been discussed on a previuos post--- But to enlighten you....my sister who is former HOA President used this as a means of getting the monthly assessments paid.. What she did is go online to the clerks office and print the page of the PUD Rider clause and insert with the overdue notice and inform the member that the mortgage company has also recieved a copy of the overdue notice etc....Worked like a charm everytime.........They ( the hoa) got their money paid QUICKLY......... Thye did have a couple of mortgage companies actaully send in checks to keep dues current and avoid foreclosure proceedings..They worked the legal collection witht the owner....LindaC
RonaldW (South Carolina)
Posts: 901
Posted:
Posted By LindaC3 on 03/19/2007 1:23 PM
......What she did is go online to the clerks office and print the page of the PUD Rider clause and insert with the overdue notice and inform the member that the mortgage company has also recieved a copy of the overdue notice etc....


Linda,
Is this rider common on mortgages? Single fqmily homes? HOA, not PUD?

Ron
SC
LindaC3 (Florida)
Posts: 526
Posted:
Yes it is common.........Check your mortgage papers--- they always want to know if it is a subdivision that is subject to dues.....LindaC
MartyD (Florida)
Posts: 43
Posted:
Yes Again...every mortgage co. I checked has the provision, usually within the first couple of pages, outlining the importance of payments of HOA assessments and the actions that may be taken by the lender if borrower defaults on such payments...and it applies to seconds and Home equity line of credits as well....
RonaldW (South Carolina)
Posts: 901
Posted:
Thanks guys. I don't have one :) but I'll look into it.
Ron
SC
ChrisW4 (Georgia)
Posts: 16
Posted:
Someone mentioned a previous thread on this subject, but I can't seem to locate it. Would someone be able to point it out to me?

This got my attention due to our own collections situation with an owner in our commmunity. In our case, the lien has already been filed; could this strategy still be effective when there is already a lien in place?
BradP (Kansas)
Posts: 2,640
Posted:
Chris:

I think it would, I would think a bank would freak out to know that someone else had a lien on the property in addition to them.
MartyD (Florida)
Posts: 43
Posted:
Chris,

I would run it by the mortgage company just for the heck of it and see what happens. The lender may come to your aid and satisfy the lien, and make sure that you get any future payments on time (escrow)...especially if the lien is accruing interest till paid. HOA's when filing liens usually don't go to the mortgager of the property only the mortgagee...but you do have that option and it is a very viable one at that...

Going straight to the lender is almost a 100% guarantee of getting the assessement paid..!
EllenR (Pennsylvania)
Posts: 1
Posted:
Hello everyone,
This idea sounds like a great one! Will someone explain how to find the mortgage co. records of the person or persons. Thank you, Ellen
GlenL (Ohio)
Posts: 5,491
Posted:
Ellen,

In my county in Ohio the information is online on the County Recorder's Office which is part of a multi-county multi-state database.
Studies show that 5 out of 4 people have problems with fractions
BradD2 (Florida)
Posts: 418
Posted:
My father purchases houses in foreclosure on the side and when I mentioned this to him he warned me about doing this behind the owner's back. He said that whenever he contacts the mortgage company for a person to try to work out a deal he has to get the written approval of the owner first.

Since you are going behind the owner's back I am assuming you aren't getting thier approval. Has there ever been a problem because of it?
MelissaP1 (Alabama)
Posts: 13,836
Posted:
I've done a foreclosure before. I'm not sure this is a good approach. Let me explain. When a HOA does a foreclosure or lien it is different than a bank/mortgage company doing it. There is a risk that the HOA is doing the bank's/mortgage companies "dirty work" for them. Giving the mortgage company notice that the HOA is doing a foreclosure/lien is giving them a "tip" that isn't going to pay off the HOA but the bank. Kind of like making an anymonous "tip" to the police about a bank robber, and NOT getting the reward money.
If the HOA does a foreclosure BEFORE the Bank/mortgage company, the bank/mortgage company is STILL FIRST to get paid off. The HOA ONLY gets the money that isn't already owed to the bank/mortgage company. So if the owner hasn't made a house payment in 3 months and the bank is going to foreclose and the HOA does it FIRST. That 3 months house payment is taken out of the auction amount the HOA gets on the property. So if the HOA forecloses for a $5K back dues, the bank is owed $4K, the HOA only will clear the $1K and NOT the full $5K of backdues. This also means the lawyer/legal costs were "fronted" by the HOA and NOT the bank. Basically, leaving the HOA doing the bank's work.
This is the risk of ALL foreclosures for HOA's. It's NOT a guarantee money maker. The HOA needs to find out IF the bank/mortgage company is going to foreclose BEFORE pursuing. If that is the case, the HOA may want to find a way to "get in line" to be one of the parties being paid off. Filing a lien may still help so that when the bank does foreclose, the HOA will stand a chance of getting the leftover funds from the auction.
So notifying the mortgage company, may not pay off. They may go ahead and do their own foreclosure and beat the HOA to the "punch". If the HOA fails to "get in line" by filing a lien, the bank will NEVER EVER notify the HOA. Why should they? They get ALL the proceeds and don't have to share. So if you notify the bank/mortgage company plan to "get in line" ASAP or all you will get is a "Thank-you for the notice".
This is a fact I found out the hardway!
Former HOA President
BradD2 (Florida)
Posts: 418
Posted:
The situation where it is most useful is when they have a second mortgage. Since the HOA would be paid first (after tax liens and the first mortgage of course) the bank would be concerned.
MartyD (Florida)
Posts: 43
Posted:
I don't believe there are any HOA'S that like to file liens against members property. The notice to the lender of unpaid assessment is the correct thing to do...its not neccesarily a committement to file a lien its just giving the lender a "heads up" that the mortgagee is not in compliance with the HOA as the mortgagor's aggrement outlines...No need to get in line for payment...you will eventually get your money from someone...new buyer...seller...or mortgage company...someone has to pay according to the CC&R'S.
BradD2 (Florida)
Posts: 418
Posted:
LindaC, where do you find the name and/or contact information for the mortgage company in Florida? I have only been able to find it after a foreclosure has started.
RonaldW (South Carolina)
Posts: 901
Posted:
Quote:
Posted By MartyD on 03/20/2007 3:55 AM
Yes Again...every mortgage co. I checked has the provision, usually within the first couple of pages, outlining the importance of payments of HOA assessments and the actions that may be taken by the lender if borrower defaults on such payments...and it applies to seconds and Home equity line of credits as well....

I ran into a banker friend the other night and asked her. Her answer - some mortgage companies have this provision, some do not. I suppose it might depend on state law.
Ron
SC
ChrisW4 (Georgia)
Posts: 16
Posted:
MelissaP: I think you're blurring the difference between filing a lien and foreclosing on the lien. The former simply states on the court record that the HOA is owed money, which means that the house cannot be sold unless the lien is cleared. That's very different from actually foreclosing on the lien, which is an attempt to take possession of the property to pay the debt off. Of everyone I know who is on a HOA board (it seems to run in my family), I've only heard of one HOA foreclosure, on a vacation property that the owner had abandoned completely, while liens are filed (and released when the owner pays or at the time of sale) fairly regularly.

That said, I am curious what happens when a property sells and the sale price does not provide sufficient funds to pay off a HOA lien after the seller's mortgage is paid. Does the lien get nullified or is it up to the buyer to pay it off at closing? Can the buyer make a title insurance claim if they can't pay it off?
BradP (Kansas)
Posts: 2,640
Posted:
Chris:

Are you talking about a normal sale? In that case my understanding is that they can't sell until your lien is removed and that means you would be paid.

GlenL (Ohio)
Posts: 5,491
Posted:
Melissa good to see you posting under your name instead of your assumed identity however before you make definite statements such as: If the HOA fails to "get in line" by filing a lien, the bank will NEVER EVER notify the HOA. Why should they? They get ALL the proceeds and don't have to share. So if you notify the bank/mortgage company plan to "get in line" ASAP or all you will get is a "Thank-you for the notice". Please specify what State you are talking about, this is not the law in every State or for every type of Association.

In Ohio if a bank or lienholder other than the Association forecloses, that lienholder MUST name the Association as a defendant, EVEN IF THE ASSOCIATION HAS NO RECORDED LIEN. This means that the Association will be served with a summons and complaint each and every time a lender forecloses on the first or second mortgage of a condominium unit, even if the Association has no recorded lien.

Chris if a home is sold at Sherriff's sale (foreclosure) the association most likely will not receive all the past due monies owed in which case the new owner starts off with a clean slate.
Studies show that 5 out of 4 people have problems with fractions
RogerB (Colorado)
Posts: 5,067
Posted:
Forclosure is a long drawn out process in Colorado. It is the last resort which would be considered by an HOA. Generally there is an automatic lien against the property for a HOA with assessments (in addition we file a lien after 100 days of delinquency). The HOA has a "Super lien" which means payment for the first 6 months comes ahead of the mortgage company in priority. If garnishment of wages and/or bank accounts does not achieve payment the next step in a legal action would be forclosure if and when there is sufficient equity to warrant it.
LindaC3 (Florida)
Posts: 526
Posted:
Brad-- Go to the clerk of courts for your county-- go to the search page-- enter persons last name- search document-- MORT.... click search...the mortgage papers will show up UNLESS it was a cash deal and that wont show--- There will many pages--- you will find the PUD RIDER CLAUSE-- It has the statement about paying dues-not allowing liens to be placed on property- obeying all deed restrictions etc...........It will also show the name and address of the mortgage company---If you run into any kind pf problem send me an email and I will do the search for you...I love investigating people via computer and public records...Good Luck LindaC
BradD2 (Florida)
Posts: 418
Posted:
I must be dense. I can't figure out how to send you an email or find my own mortgage in Orange County. At the clerk of court's website I can find legal cases but not records.
LindaC3 (Florida)
Posts: 526
Posted:
Brad--- [email protected] I dont mind if I post mt email address.....I guess it's not against the posting rules.......LindaC
JulieS (Georgia)
Posts: 412
Posted:
If the bank forecloses in Georgia and the dues are not paid, then the HOA gets nothing for that year (write off to bad debt). We cannot collect anything until the following year from the new owners. This is one reason for becoming a POA in Georgia. Under the POA, you automatically have a lien for unpaid dues, you can foreclose with being higher on the lien payment list, and if for some reason the dues are not paid, you can collect from the new owner as the assessment is attached to the property and not the homeowner.

In FL, assessments can be paid monthly with the mortgage payment into an escrow account, like taxes and insurance. Wish we could do that!
GloriaM (North Carolina)
Posts: 829
Posted:
Julie:

The law that Roger is speaking about, some states have enacted. In New Jersey the Legistrators under pressure from CAI along with HOA's enacted such a law that all HOA's would receive 6 months worth of their dues in a foreclosure. I now live and operate in NC and they do not have such a law. I believe it would behoove all HOA's to push for their states to enact this same law.
BradD2 (Florida)
Posts: 418
Posted:
Has anyone considered the FTC Fair Debt Collection at http://www.ftc.gov/bcp/conline/pubs/credit/fdc.htm?

It says on the FAQ:

"May a debt collector contact anyone else about your debt?
If you have an attorney, the debt collector must contact the attorney, rather than you. If you do not have an attorney, a collector may contact other people, but only to find out where you live, what your phone number is, and where you work. Collectors usually are prohibited from contacting such third parties more than once. In most cases, the collector may not tell anyone other than you and your attorney that you owe money."

Doesn't contacting the mortgage company about their debt apply? I would love to handle my Association's deliquent accounts without the use a lawyer but don't want to be sued either.
BradP (Kansas)
Posts: 2,640
Posted:
Brad:

I have often that this as well and have been very skeptical of this approach. If you have filed a lien then it is public knowledge and I think that would not apply, but before you file I would question this. I am sure it works, just don't know the legality of it and honestly unless my lawyer approved I wouldn't do this.
BradD2 (Florida)
Posts: 418
Posted:
The one thing lawyers are scared of is other lawyers. I haven't found one that will put something they tell me in writing. They are too scared of being liable for something themselves.
KarenS8 (Texas)
Posts: 2
Posted:
I am a president of a homeowners ass. and I would like to file a lien on some of my homeowners because they have not paid the dues and I am tired of paying my attorney all these fees because of stuff being not being done before i took over we had several home dues we lost to foreclosure is there a form we have to fill out and do we have to give notice that we are filling a lien
karen this is in texas
BradD2 (Florida)
Posts: 418
Posted:
I don't know about Texas, but I believe the standard is 30 days notice.
MartyD (Florida)
Posts: 43
Posted:
Karen...

You give them notice and their mortgage company...certified mail is GOOD! If you really want to go the extra mile...tape a carbon copy of the certified letter to their door and photograph it. (sometimes people don't get certified mail and will ignore it sitting at the Post Office until it can't be delivered any longer)
Make sure that you allow them a grace period for "Coming Clean"..2 weeks... should be sufficient and if they still are holding out...and you've heard no response from the mortgage company...file the lien. You will get a response eventually...you can only WIN, WIN, WIN.

For another poster up the board aways....conferring with the mortgage company is nothing more than two corporations conversing. Its not bringing anything into the public eye...and is kept private all the way to fruition. Yes you may have a member who becomes irate because he's had his hand slapped...he thought he was going to jerk the HOA around a little and play his silly little game of non-payment....BAMM...HOA turned the table on him and his little plan fell apart and now his mortgage company is engaged to the point of possibly uping his escrow account to defer any more late assessment payments...IMHO

WendyM5 (North Carolina)
Posts: 1,522
Posted:
Quote:
Posted By MartyD on 03/28/2007 1:00 PM
Karen...

You give them notice and their mortgage company...certified mail is GOOD! If you really want to go the extra mile...tape a carbon copy of the certified letter to their door and photograph it. (sometimes people don't get certified mail and will ignore it sitting at the Post Office until it can't be delivered any longer)
Make sure that you allow them a grace period for "Coming Clean"..2 weeks... should be sufficient and if they still are holding out...and you've heard no response from the mortgage company...file the lien. You will get a response eventually...you can only WIN, WIN, WIN.

For another poster up the board aways....conferring with the mortgage company is nothing more than two corporations conversing. Its not bringing anything into the public eye...and is kept private all the way to fruition. Yes you may have a member who becomes irate because he's had his hand slapped...he thought he was going to jerk the HOA around a little and play his silly little game of non-payment....BAMM...HOA turned the table on him and his little plan fell apart and now his mortgage company is engaged to the point of possibly uping his escrow account to defer any more late assessment payments...IMHO


Did you get mortgage company to pay the past due hoa fees? I realize this is an old post so if anyone else has actually been successful going this route please let me know
vis ta vie
MelissaP1 (Alabama)
Posts: 13,836
Posted:
Old post from 2007.
Former HOA President
WendyM5 (North Carolina)
Posts: 1,522
Posted:
Still relevant today and would like to discuss thanks
vis ta vie
SheliaH (Indiana)
Posts: 6,964
Posted:
In that case, start a new conversation so you'll get more current information
If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

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