Unpaid Assessment to Lien to ?

One person's comments (based on 5 years wresting with this crap as my board's treasurer!). For the most part, your proposals are similar to what we did, so good job!

You're correct that foreclosure should be a last resort. You should also understand that in most cases, getting rid of the deadbeat once and for all via foreclosure may be the best it will do. Even if you tage the house and sell it, it will usually sell for an amount that will only satisfy the mortgage company because it has to be paid before the house changes hands. and therefore, the association may not get anything.

When you foreclose, it's best to have a buyer in the wings so the association won't have to hang on to the house (and have to pay taxes, HOA fees and other expenses it might not get back when the house is sold.

I'd also review the foreclosure decision with the association attorney because there could be other things that gum up the works, such as bankruptcy or tax liens. We had our attorney review what had been done up to that point and give us an estimate on how much more that would cost so we could decide if it was worth it.

Our community has an acceleration clause in the collection policy - we pay monthly, so if the delinquency hits three months, off it goes to the association attorney for collection. At that point, all remaining assessments for the year immediately become due and payable. You didn't say how often your assessments are due, but if they're monthly or quarterly, this would be a good start.

This is also why you need to get the account to the attorney as quickly as you can - the longer you go back and forth with the homeowner over getting paid, the tougher it will be to collect. That will also cost the association more money in sending letters, phone calls and whatever else your property manager might do to manage the account.

As soon as you can, find out who holds the mortgage on the house - usually there's language that requires the owner to ensure no liens are placed on the house (e.g. tax liens), so you may be able to contact the mortgage company and let them know what's going on. Some might pay the delinquent amount and tack that onto the remaining balance of the home.

Knowing who holds the mortgage may also help you determine if you want to pursue foreclosure at all - if the mortgage company is already planning to take that action, you won't have to, but be sure to file a lien to protect your interests. That said, even that lien may not help you because the mortgage company only cares about getting paid and to hell with anyone else who'd like to use the house as a means to get paid.

Finally, the payment plans. Granting them or not should be a Board decision and that decision should be final. The homeowner should be required to provide written and verifiable documentation as to his/her financial situation that warrants a payment plan. When the board makes its decision, the agreement shouldn't last longer than a year (6 months is best) and when it's over, the account should be completely current, so the money paid should include an amount for current fees as well as what's owed - have the homewoner make weekly or bi-monthly payments, if necessary. The agreement should contain language stating things like bouncing checks will kill the payment plan, it won't be renewed and everyone will head for court for a judge to decide what happens next.

Hope some of this is useful!

Never sue. Just place a lien or foreclose. Suing is not a good option for collection. Liens have more "teeth". One can't sell until paid. Foreclosure house is taken away. Suing none of that happens.

Make sure you have a set time line. Like 6 months behind you lien. 1 year CONSIDER foreclosure. You shouldn't be picking a time line out of the blue to collect. Like "We are sick of waiting you to pay up so lien on you...". It should be "Hey we have a 6 month policy and your behind X months etc..."

Payment plans are good as well as "forgiveness". You may be able to "forgive" late fees and/or interest if someone is willing to pay to avoid a lien. It's an option we offer as long as someone is willing to pay what they can. Otherwise, we keep the late, interest, and legal costs of filing liens.

Your HOA does NOT want to own the house in a foreclosure. It's best to avoid that option. Especially if in bank foreclosure. Never foreclose if the bank is foreclosing. Foreclosure is just a "Stop the bleeding" process. Don't expect money back just the person no paying out.

Your on the right track. Just a few tweaks...

George

Tell me more about:

3. Sue for assessment and interest and legal fees when the assessments get to a predetermined amount. (what is a good qualifier - time, amount?)

That aside, I say #2. I also believe foreclosure is last resort unless there is little to no mortgage outstanding. I own my home. My neighbor has a 100% mortgage. Guess which one might be worth foreclosing on?

Since this bloody thing doesn't have an "edit" feature.

What I wouldn't do is separately file suit for assessments, fees, and interest; that's what the foreclosure is for.

A couple other things:

1. If the property has a renter, collect the rent every month until the back due assessments are paid.
2. Regardless of any purported "restriction" or instructions written on or accompanying a payment of assessments, apply payments as follows: interest, late fees, costs and attorney fees, and, last, assessments (this is per FL law).

Since my post went over everyone's head and I will be leaving for vacation soon, I'll give you just a little more information and do with as you may.

This is for a Condo Ride, notice item F: https://www.fanniemae.com/content/legal_form/3140.pdf

This is a PUD Rider, again notice item F: https://www.fanniemae.com/content/legal_form/3150.pdf

Here is the link for MERS (Mortgage Electronica Registration Systems. This is the DMV of mortgages. This will tell you who the borrower is making, or should be, making, their mortgage payments. Based on the remedy in F, these are the folks to ask for a homeowners HOA payments. The easier search method is with the MIN, which can be found on all Security Instruments or Deeds of Trust.

https://www.mers-servicerid.org/sis/common/search?searchType=&min=&fn=&ln=&cn=&num=&street=&unit=&city=&state=&zip=&exp=&cert=

A couple more things to add...Lien foreclosure is a type of suit. Suing just to get a judgement for unpaid assessments is, AFAIK, completely pointless. If they weren't paying assessments, they're not going to pay a judgement. After filing the lien, if they still don't pay, you have to foreclose if you want to see the $.

As someone else mentioned, something to consider is, if they're not paying the HOA, are they keeping up with mortgage payments? If they're not, sooner or later, their lender will foreclose, and if that happens, and the lender gets the house to auction before you do, you're not going to collect the debt.

I don't know if it's different in other states, but in FL, the way lien foreclosure works is, the plaintiff (HOA) files the case, the defendant (homeowner) answers (or doesn't). If you're successful and eventually granted final judgement, the county schedules an auction date for the property. i.e. The HOA doesn't "line up a buyer". It's auctioned to the highest bidder. Suppose, in your motion for final judgement, you show a total debt owed of $12,000. You're allowed, and would generally put in a set off bid of $12,000 (but I suppose you could go lower if you wanted). If the HOA is outbid, that high bidder gets title to the property. Assuming there was a mortgage, there still is one, and the "new owner" still has to deal with the lender. So, it's not unusual for lien foreclosed homes to sell for a tiny fraction of their "value", because the buyer doesn't end up owning the home free and clear. If there's a bidding war, and the property sells at auction for more than your final judgement amount, the former owner is entitled to the surplus, but has to request it from the court.

I'm not a lawyer...there's some generalizations above...but I've been through the process (as the plaintiff).