Management company didn't know about a house.

We have a home in our community that was not in the property management company's system and therefore has not been billed or paid dues since 2011.

How is the management company supposed to become aware of a new owner? Homes have been purchased new and used many, many times since then without issue.

I'm sure at closing that the residents became aware of the HOA and paid dues at that time and it would be hard to miss the HOA, due to signs and hosted activities.

We are trying to understand who is responsible for this oversight, so we can decide what to do. This is probably about $6k in dues.

Thanks!

We had/have a similar problem. The Board of Directors is ultimately responsible for this. Often times, a management company will be tasked with keeping up with property transfers. This is something a management company might charge extra for if it's not written into their contract.

State law identifies the current roster of homeowners as an "official record" that the association is responsible for maintaining.

Right now we are self-managed and it's up to us to monitor the public official records of the county to spot new homeowners. That's basically what a management company will do (if you pay them to do it). We let our bookkeeper know when a property turns over and they update their billing system with the new information.

PaulJ, the home is automatically supposed to pay in once they buy in. It's part of the CC&R's they are to pay. Once your an owner your a member. There does not have to be a paper bill sent to a home to be "billed". We never sent out a notice for our dues or bills. It was posted at our mailbox at the entrance with a box to put your dues in. So if it's pretty clear there is an HOA, then you should click a switch in your head "Maybe I should be contributing something?".

Not sure if the new owner should be let off on their dues they owe now. The previous owners yes because that ship has sailed. The new owner/member? Not so much. It's time to work out a deal to collect from the date of their ownership.

Fair points but:

1. When you buy a house, there is a mountain of paperwork. Even though there are disclaimers stating that you've read and understand everything, who actually does? And who actually reads CC&Rs and who would actually know how much is due every month and how to pay?

2. In the first post, I could be misreading it, but did the owner actually get some kind (even via a sign) of notice of amounts due and how to pay? If not, that's another point in favor of the owner.

3. The statute of limitations could be as low as a year or so. I don't think that the HOA could pursue either owner for payments that should have been made, but weren't, earlier than the statute of limitations period.

The board can blame the property manager but the property manager's contract likely has some protective provisions in it, so they'll just be pointing fingers at each other.

If this came to court, the owner would probably win.

Agreed, but if this comes to the HOA suing the owner to pay up, my points are why the owner will likely win in court. Thus the HOA shouldn't focus on getting payment from the owner. Maybe a modest write-off by the property manager of some of its fees, or, more likely, the HOA just eating the loss and maybe learning to be more careful next time.

This might be helpful to some: https://www.knoxre.com/blog/closing-on-a-house/

How could a home transfer happen without the HOA knowing. The obvious is a cash transaction where escrow is not opened. It happens, especially on foreclosures.

Who in your association handles escrow or home sales, the HOA or management?

Was this home a new home and never assessed? If it was a resale, then prior to transfer the home should have been charged HOA dues. Was the property ever on the books of the management company? Was there a recent management change? Did the management company check the number of properties with the Secretary of State's records?

For the record, on the Deed of Trust, page 2 there are a series of checkboxes, one or more are for Condo or PUD rider. This is a recorded legal document, stating a Condo or PUD and the legal remedies for non-payment of assessments. People on your Board and management company should know that and how to look the information up.

Why wasn't the property in the system? Did someone accidentally delete it? The account should be for the property, not the owner, so the list of properties to be billed should never change.

Since assessments are required by CC&Rs, I think the current property owner is still responsible for payment since they should have been aware of them. In Texas a seller is required to notify the new owner of the HOA but lack of notification does not exempt the new owner from the CC&Rs.

I would suggest speaking to an attorney. I believe there is a statute of limitations for collecting assessments if you haven't billed or placed a lien.

Unless the property was never added or never deleted, your financials would be off, as you said, to the tune of $6,000.00. Why didn't someone on the Board catch it?

Kris

Do not be surprised if the owners of the "missing" house do not believe they are part of the HOA no matter what docs were signed at the closing. Have the owners/occupants of the "missing" house used any HOA amenities? If so, this is defacto acknowledgement they are members of the HOA.

IF it was a cash sale, there may have been no escrow.

Thanks for all the varied responses and opinions. Discussion with management company is ongoing. Some additional and new points:

0. This is in Texas.

1. The homeowners are the original owners of the home. New ownership is what seems to trigger updates to the management company's database (point 3).

2. The management company has since answered they got the list of homes from the previous management company (the builder) and address was missing. However, we have a printout of accounts from the builder from that time and the address is there. But we really don't know the source of the current management company's accounts. We are currently asking about this. Could it be a clerical error in other words? This is their database they use to send out letters, bills, notices, etc.

3. There is nothing in the contact about the management company regularly making sure the database is kept up to date, but they answered this: "We generally don’t do a full property ownership audit. If mail starts being returned, we go to [appraisal district] to confirm ownership and mailing address. Otherwise, all ownership changes are the result of resales. Title companies send us the settlement statements after each sale and the ownership is updated." So they are keeping it up to date. Question is only about this missing address and why it's missing.

4. I left out that in 2016 when I was comparing names in our gate system with a list of residents provided by the management company (doing cleanup) I noticed this owner/address was in the gate system, but not in the management company list. I pointed this out to our rep and her admin and asked if they'd been paying dues. I received a response I didn't really understand, and I stopped asking. They didn't add the home. I didn't understand the significance of what I'd stumbled into. (The management company director is not acknowledging this or responding about it in any of her responses.)

As to why our board never caught it otherwise, besides "I did in 2016", and "the management company maintains the list", I'd say it's because the owner kept the home maintained. It came up again now because their garage door stain faded and I reported it. The management company could not find the address in their database.

Someone mentioned to get a lawyer. We've used lawyers to pursue unpaid dues and the legal fees likely would exceed what we've missed collecting. And unlike the other case, we have to pay the legal fees, not the homeowner.

I probably missed something. Again, thanks! I'll try to keep this thread updated.

Sorry Bubby, but you the board are on the hook. Why didn't a single one of you board members say wait a minute at your budget ratification meeting? You're supposed to collect X amount of assessments from all owners and you only collected "Y" amount of money. Someone was asleep at the wheel. Y'all's need to meticulously go through each line item and bring your calculator, If something don't add up, bring it up to your PM at the board meeting.

Who is Bubby?

Die Hard, Hans, Bubby!!!!!

I think this is an over-simplification.

Until two years ago, homes were still being built. We never got a map out or walked the neighborhood and counted houses. We relied on the list (count) of homes provided by the management company. So the math always worked out.

(We are definitely collecting more than we are spending too. Planning for the future, etc.)