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Posted By SheliaH on 06/02/2016 1:31 PM
I concur with what most have said so far â have the meeting at the time specified in the CCRs and tell homeowners the board is working on a policy and would like their input â details to follow. Once the policy is approved, youâll have to make a formal announcement to the homeowners anyway - you don't have to delay the annual meeting for that.
You say this policy will address banks that take possession of homes, but donât pay HOA dues, but this seems to be a procedural thing between the banks and the Association â unlike, say, a change in how parking rules are enforced, I donât know if homeowners would care enough about this aspect of collections to comment. You SHOULD tell them the impact the banksâ behavior has had on the Association budget and the Board is working on this policy to ensure banks are held responsible when they take over a home, just as it does with individual homeowners.
At the same time, you can also remind homeowners that just because the mortgage company forecloses on a home, that doesnât necessarily relieve them of the obligation to pay assessments â THATâs where Iâve seen problems start because the mortgage company files foreclosure, the homeowner moves out and thinks thatâs a wrap for his/her obligation to pay.
However, when I was on the board, our attorney told us this is a personal obligation of the homeowner that follows him/her until the delinquency is paid (or the amount discharged in bankruptcy or something else happens that results in the board having to vote to write off the amount). Iâve seen a number of articles on the web (including several from HOA attorneys) that basically say the same thing.
In fact, one went on to say the homeowner should continue to pay HOA fees, regardless of what the mortgage company does or when it does it â that could take a while and in the meantime, the homeowner wonât have to worry about another set of legal action and have to spend more money defending him/herself in court or filing bankruptcy. Not to mention that some HOAs write off delinquent accounts because all their collection efforts have failed and then file 1099-Cs with the IRS on that amount. My understanding is the IRS would consider that income to the owner and therefore taxable.
We have people who we see only once a year.
The topic is very complex (and scary to some). Most people won't understand what we're doing, but a banker most certainly will.
Every one knows that 80 houses have been paying for services to 81 houses for 7 years. So everyone understands that this bank problem affects them directly. And we now have our 2nd REO house.
Yes our argument is that banks take responsibility when they take ownership, but we just had a court that decided otherwise. People will want to know what we're going to do about it. We need to have a better answer than "We're working on it?"
Also, it's not uncommon for people to confuse things in their own minds - We might say "we're thinking about ABC." And they might go home thinking "They're gonna do ABC." We're very cautious about pre-announcements, especially at the annual meeting.
As far as personal obligation of homeowner is concerned, this was a nothing down house to a person who shouldn't have been put in a house in the first place. We've decided not to spend HOA money chasing someone who doesn't have a pot to pee in. Sure we can get a judgment. But what does that do for us.
Yes a discharged debt could be income. Board is mixed on whether we should take that path.
BTW, the annual meeting issue was only a hypothetical. The REO house problems are real.
Sikubali jukumu. Read all posts at your own risk.