Balance on HOA dues account at closing

Started by PatJ1 • 5 replies • 1067 views

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PatJ1 (North Carolina)
Posts: 568

Posted:

We are a condo HOA with monthly dues. I understand that at closing, documents are usually ordered and that they would include any previous balance due the HOA. But what happens when a balance is left? Not in foreclosure situations, but we have it happen in cash deals, no mortgage, and private sales.

We have 2 on the books recently, both under $100.00. Is the HOA entitled to collect these amounts from the new owner? In both cases new owners are totally aware of the HOA.

My feeling is that the new owners should check that the dues are current at closing and that we should collect. Am I wrong?

RogerB (Colorado)
Posts: 5,067

Posted:

PatJ1,

If this is an assessment (not dues) this amount is against the property and are paid by the current owner so the balance due stays with the property. If the sale was handled by a title company and the buyer got title insurance then the buyer needs to check with the title company. The title company, sellers agent (if any), and/or the seller may be liable for the assessment balance due.

If these are voluntary dues paid by the homeowner(not an assessment against the property)then there is no balance due.

BenA2 (Texas)
Posts: 1,273

Posted:

Yes, you are generally entitled to collect past dues/assessments because they are attached to the property, not the owner. A lien will protect you but it may not be worth filing a lien for $100, depending on what it costs you.

There could be something in your state law affecting this. For example, in Texas, if you do not have a properly filed management certificate (basically detailing contact information for the HOA) you cannot collect previous dues/assessments after the sale is final.

RichardP13 (California)
Posts: 3,868

Posted:

My first question would be are you self-managed or have a management company. If a management company is involved, they should be handling this on your behalf.

The assessments/dues are against the property, but are the responsibility of the owner of record. If it slipped through the fingers of a self-managed HOA, it would be too bad, how sad. You write it off as uncollected debt. You could go back to the escrow officer and plead your case depending on who handled the transaction.

The HOA needs to know what is going on. They could have done their due diligence and was told there were no past dues.

PatJ1 (North Carolina)
Posts: 568

Posted:

Quote:

Posted By RichardP13 on 05/24/2018 11:17 AM
My first question would be are you self-managed or have a management company. If a management company is involved, they should be handling this on your behalf.

The assessments/dues are against the property, but are the responsibility of the owner of record. If it slipped through the fingers of a self-managed HOA, it would be too bad, how sad. You write it off as uncollected debt. You could go back to the escrow officer and plead your case depending on who handled the transaction.

The HOA needs to know what is going on. They could have done their due diligence and was told there were no past dues.

Richard,

Some questions/comments came to mind in reading your reply. I am the Pres. of the HOA and always try to know what's going on by observation and listening, but with 144 units it's not always possible.

How is our MC or HOA to know about a private sale from owner to long time renter? Or any sale for that matter if documents are not ordered. A for sale sign might pop up, but we do not allow them in the community. In one instance they closed in November and I found out in February only because I live next door to them and they told me. The owner actually had a credit balance on the account at the time of closing and never requested a refund. Monies may have been exchanged on the settlement sheets at closing, but I have no way to know. We only see a balance due of under $50.00.

We changed MC on 1/1/18 and it took them until the end of March to enter previous balances into the owner accounts. The mess that has been created has been an embarrassment to the BOD and an insult to the owners. We are interviewing other MC's.

It was our new PM who sent me the question from the owner because she didn't know what to do. Through researching my previous kept reports I also discovered that the MC double billed the December assessment in February. It was applied to the credit balance of the previous owner and billed to the new owner.

Thank you for your reply. Sadly, I have a lot of work to do undoing this and other messes and finding a new MC.

The responses here have given me

RichardP13 (California)
Posts: 3,868

Posted:

Pat

I took over a HOA last November where the previous MC refused to turn over any financial information and we are in court over those matters. So I know the frustration of getting owner balances. Owners are liable for the balances they have up to the time title is transfer. If a credit was improperly applied to the previous owner, it should be an easy fix, at least for me it is.

MC's should have access to title reports, I do, where they can pull a grant deed or see when title was legally transferred and recorded to determine who owes what for when.

Gladly, you are dealing with very little in money, how about getting the short end of the stick for $10K, ouch!

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