Fees and Yard Maintenance During a Mortgage Foreclosure

Started by KurtP • 7 replies • 2172 views

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KurtP (Florida)
Posts: 2

Posted:

I am the President of a HOA that consists of 71 homes that pay only $30.00 per year in homeowners dues. A small wonderful neighborhood and a small amount but we still have our problems and complaints that I have seen in other topics. Our HOA continues to work, on a personal level, with the minor violations of the Declaration of Covenants and Restrictions such as visible trash cans, boat trailers and loose pets, however, I would like to know if anyone has any information on how to deal with properties that are under foreclosure by a mortgage company.

We currently have 3 homes that went into foreclosure because the owner's were not able to pay their mortgage. How can a HOA receive past dues and make sure the yard maintenance is keep up to preserve the neighborhood appearance?

Any advice will surely help.

GloriaM (North Carolina)
Posts: 829

Posted:

Quote:

Posted By KurtP on 06/26/2007 6:04 PM
I am the President of a HOA that consists of 71 homes that pay only $30.00 per year in homeowners dues. A small wonderful neighborhood and a small amount but we still have our problems and complaints that I have seen in other topics. Our HOA continues to work, on a personal level, with the minor violations of the Declaration of Covenants and Restrictions such as visible trash cans, boat trailers and loose pets, however, I would like to know if anyone has any information on how to deal with properties that are under foreclosure by a mortgage company.

We currently have 3 homes that went into foreclosure because the owner's were not able to pay their mortgage. How can a HOA receive past dues and make sure the yard maintenance is keep up to preserve the neighborhood appearance?

Any advice will surely help.

Kurt:

During the limbo stages of foreclosure, until the bank takes Title it is still legally the "old" Owners home and they are liable for it. But of course you will never get them to own up to that obligation, they are in foreclosure. Therefore the HOA can a) wait until the bank or HUD takes Title or b) choose to mow the law in a limited way (once/twice a month) and tack the mowing charges onto the account.

As for the past dues, they are wiped out in the foreclosure and the bank will only be obligated for their share of the prorated amount. Never a pretty picture for the HOA.

KurtP (Florida)
Posts: 2

Posted:

Gloria,
Your answer is what I had expected. Just this weekend, myself and another board member mowed the yards and that is probably what we will continue to do since it only takes 30 minutes to make each yard look nice. Additionally, I am sure we will waive the fees since it will probably be too much trouble or costly to seek legal assistance to recover any unpaid dues. I did, however, send a letter to the mortgage companies attorney's to have on record that there are fees that have not been paid and to see what we can do about maintenance when the foreclosure is complete.

I guess I was checking to see if there are other options when there is a foreclosure when the owner is not to be found or if they do not give a darn about a property that they are loosing. Until the foreclosure is complete or another person takes possession of the property, the board will continue to do what is best for the neighborhood by just being neighborly.

Thanks for the response and look forward to many more advise seeking topics.

Kurt

MelissaP1 (Alabama)
Posts: 13,836

Posted:

You could put a lien on the property for the money owed. However, the bank will most likely take all the money from the foreclosure sale leaving nothing for the HOA. However, if the house gets turned over to HUD after the sale (no one buys it) then HUD may pay up the back dues and pay the current ones after they take over. If you don't have the lien, your not going to be in the "pecking order".

Do NOT ever forgive dues being owed. MAJOR Mistake. Even if your NOT going to get the money collected, it needs to appear on your accounting records. Especially, if HUD takes over the properties. You need to show the negative amount NOT being collected. The New owner's will NOT be responsible for paying the backdues. However, the lot will show on record that there was a debt prior to ownership and provide history.

It's good someone is volunteering to mow the lawn. That will keep other houses in the neighborhood value looking good. However, if a real estate company ever purchases the property for resale, I would ask them to take over that chore. It's their property now and if they want to sell it, they will mow it.

Our lawncare was part of our dues. So no matter what status you were with the HOA, the lawn ALWAYS got mowed by the landscapers. That way, the home wouldn't stick out like a sore thumb and attract unwanted attention.

Former HOA President

BradP (Kansas)
Posts: 2,640

Posted:

Kurt:

I can only go off of experience in our neighborhood. We got petitioned to court to extinguish our rights to collect back dues and such. We are like you, our dues are only $120 a year and the house in question owes only $66. We decided from a business standpoint that it would be financially better to not pursue the $66 because the legal fees and such would be much more than that. So far we are lucky as the owners are maintaining the property. However, if they didn't it sounds like you have a good plan as long as they are ok with you entering the property.

BradD2 (Florida)
Posts: 418

Posted:

What State?

GloriaM (North Carolina)
Posts: 829

Posted:

Quote:

Posted By MelissaP1 on 06/26/2007 8:34 PM
You could put a lien on the property for the money owed. However, the bank will most likely take all the money from the foreclosure sale leaving nothing for the HOA. However, if the house gets turned over to HUD after the sale (no one buys it) then HUD may pay up the back dues and pay the current ones after they take over. If you don't have the lien, your not going to be in the "pecking order".

Do NOT ever forgive dues being owed. MAJOR Mistake. Even if your NOT going to get the money collected, it needs to appear on your accounting records. Especially, if HUD takes over the properties. You need to show the negative amount NOT being collected. The New owner's will NOT be responsible for paying the backdues. However, the lot will show on record that there was a debt prior to ownership and provide history.

It's good someone is volunteering to mow the lawn. That will keep other houses in the neighborhood value looking good. However, if a real estate company ever purchases the property for resale, I would ask them to take over that chore. It's their property now and if they want to sell it, they will mow it.

Our lawncare was part of our dues. So no matter what status you were with the HOA, the lawn ALWAYS got mowed by the landscapers. That way, the home wouldn't stick out like a sore thumb and attract unwanted attention.

Kurt:

I would not suggest placing a lien on a home in foreclosure. You will be throwing good money after bad. Once the bank takes Title write to the bank for them to begin maintaining the property. Until then mowing twice monthly just to keep it looking "okay". I have several properties in this stage and we have to address them with the boards on which avenue they want to pursue.

JM2 (Oregon)
Posts: 439

Posted:

Hi Kurt:

I'm the "compliance coordinator" for the master-planned community for which I work. I've had some luck working with the bank/mortgage company to maintain things after a property has been foreclosed. If there is a real estate sign that goes up, talk with the agent; otherwise, send a certified letter to the mortgage company (with a 1st class copy being sent as well) notifying them of their responsibility per your CC&R's and a copy of the enforcement resolution (if you have one) and state in the letter that you are giving them proper notice to maintain the house (such as, if your enforcement policy allows for a two-week notice before fines start, let them know you're giving them a 14-day notice).

This is a very "do-able" situation if you have a good enforcement policy in place.

J. Patrick Moore, CMCA

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