NEW OWNERS- NON PAYMENT

During the 10 years I served on my HOA board (5 as treasurer), delinquencies is something that came up over, and over and over again. There are a lot of reasons why it happens and I found there were two sets of delinquent owners. As you note, there were those who seemed to have the attitude that everyone else should pay assessments except them (while still expecting the services provided by the association). and the ones who had financial hardships due to job loss, major medical illness or now living on a fixed income which hasn't kept up with inflation and the higher assessments necessary to keep up with inflation. It was very frustrating - it's one thing to work with the folks who had genuine financial hardships (usually they were up front about it), but the others came up all sorts of tricks to avoid paying. We caught some of them, but others eventually walked away from the house and the association was out thousands of dollars. I hope your lien leads to better results - we also use them and have had some success with them.

That being said, after 2008's real estate meltdown, you would think everyone would be using more thought in buying a home, but unfortunately, we still have people who pay more attention to buying groceries or a car than a house. It's also true some people aren't told about them (the owner and realtor are more interested in the money and the owner wants to get out as soon as possible). Of course, they're shocked and dismayed s soon as that coupon book hits the mailbox. In my state the law was changed a year or two ago requiring certain disclosures before a house is sold, such as the presence of a HOA and whether there are outstanding assessments against it. I don't know how effective it is, but I would hope it's a start.

So, don't be surprised at the lack of knowledge. In the end, I think people need to take more initiative in figuring out what they're getting into, considering all the time and money they're about to spend. At the ripe old age of 40, I was a first time homebuyer when I brought my townhome and one of the best things I did was to sign up for a program for first time homebuyers that took you through the entire process, from cleaning up your credit to the basics of home maintenance. They didn't talk about HOAs very much, but because it was mentioned and my realtor told me there was one governing my community, I did some research on my own.

In my area, and probably Florida in general closing agents seem to do a good job of letting buyers know what to expect, and we've had no problem new owners and dues.

Luckily, our default rate has always been low, mostly homes in foreclosure, occasionally because of financial difficulty, never because people just don't want to pay.

In Florida condos there's an obligation on the part of the seller to deliver all relevant documents and rules to the buyer. There is no such obligation in an HOA. There's a "disclosure summary" that's the responsibility of the seller to deliver to the prospective buyer that should disclose the existence of an HOA and the assessment amounts, but if the seller does not give that to the buyer before they go to contract, the buyer gets an extra 3 days to back out of the deal. There's also an Estoppel Letter (or certificate) prospective buyers can demand (and they have to pay for it) that lists any overdue moneys owed to the association and/or outstanding violations on the property. A very useful thing to have, unfortunately it's not legally required to obtain one and a buyer will be on the hook if he does not obtain one and encounters a nasty surprise after closing. In Florida there's also a presumption that since the deed restrictions and covenants are recorded in the public records of the county, it's on the buyer to be aware of that. Caveat Emptor and all that.

With that said, realtors and real estate agents will often walk a buyer through the process and strive to make sure the buyer is fully informed. But not all of them. We have a few owners who bought homes here and had absolutely zero idea that they were moving into an HOA where monthly assessments were mandatory. Luckily, none of them had a real problem with it.

We're very fortunate in that the last delinquency here was wrapped up about 7 years ago. During the great financial crisis about 6 owners lost their homes due to financial hardship. Since then, as far as I know, we haven't had any delinquincies go past 90 days. There's certainly no one here who's not paying out of spite or a mistaken sense of "I don't have to pay".

Typically, a closing company will contact the Assocaition to obtain a status of the account (current through date, amount of assessment, etc.). When this happens, I always ask for a copy of the ALTA (replaced the HUD-1) or deed (as Richard from CA asks for). I specify this is so the Association has the correct spelling of the buyers name and contact info (which is helpful in the case of rentals). Every closing company (or closing attorney) I've asked has provided.

Remember there are 2 things assured in life... Death and Taxes... So if you ever need to find someone go to the tax records. It should provide the information of current or recently former owner information.

Plus always keep sending notice to BOTH addresses. If you ever have to take legal action like foreclosure, you want to make sure that HOA address is given proper notification even if the person does not live there. Courts seem to like to show proof the HOA did try to contact the owner via their HOA address as well.

It's not unusual for the HOA not to have the latest owners information. Our Secretary is responsible for keeping up with this according to the responsibilities of the board officers. However, many don't or think the MC does it. As you found out, that's not exactly true. Not all HOA's know who all the owners are 100% of the time. It's just best to establish a process or someone responsible to make sure that happens.

Who's then?

Typically, the Association Secretary has the responsibility to maintain the membership list.

Your Association has delegated the task to the MC.

Keep in mind that one can delegate tasks. They can not delegate responsibility.

This goes for finances as well.
The Treasurer is responsible for maintaining the books for the Association.
The MC has been delegated with that task.
However, the Treasurer should spot check from time to time (trust but verify).
To illustrate: If money goes missing, the question will become why didn't the Treasurer know about it sooner.

Just to clarify, the association's MC may assist the board by keeping track of sales, but it's ultimately the board's responsibility to have a firm grasp on the list of owners. You can delegate some of that to the MC but it's ultimately the association's responsibility to know who the owners/members are. Normally this is information maintained by the Secretary. If your MC goes out of business tomorrow and locks their doors and stops answering the phones, who's in control of the list of owners? It had better be the Secretary.

They are responsible for keeping that information up to date. And, all board members have access to every owners account, information ( though usually just an address- correct or not ) as well as all financial records and I do keep track of everything- However, our board is not very involved beyond voting on the items that must have full board vote. They do the bare minimum. Unfortunately, if they are required to do much more- we would fail to have a board, at all. And, I mean that completely. No one would volunteer. Ever. No matter the consequences.

So, those that have a healthy board and HOA- be thankful. We do not.

Thanks again everyone for the responses to my original question- I was able to pass the correct info along to the MC and she actually sent a new notice out yesterday.

K.