Foreclosing on a Builders Lots

Curious if anyone on here has had experience with foreclosing on empty lots that a builder owns? We have several different builders in our subdivision (15+ year old subdivision that is still adding new phases) and all but one pay the dues for their lots without issue. There's one builder who purchased three lots over three years ago and has not paid HOA dues since. He's built and sold a home on one of the three lots but the other two are still empty.

Although, a cheaper bet might be to lien the lots, and wait.

We try to take steps to stay away from sending to collections altogether because of costs. It's beneficial to the HOA and owners. And by and large that has served us very well. Was just curious if anyone has actually gone through the process of foreclosing on a property for their HOA.

It's not an action we would take lightly but at the same time ignoring assessments, letters and collections can't be taken lightly either.

Whether assessments are due for undeveloped lots depends on the CCRs and/or other governing docs. A blanket statement that builders don't have to pay is wildly inaccurate.

Yeah, all lots in our HOA receive the same annual assessment regardless of whether the lot has been developed or not. In our original documents the declarant didn't have to pay dues on lots he owned in a phase that hadn't sold at least 75% of the lots but we've removed that by amendment in recent years and this builder isn't the declarant anyway so it wouldn't have applied to him regardless.

Chad,

Our HOA has foreclosed a property, a process done COMPLETELY by lawyers. If the builder owns the property outright, you'd auction the property and either the builder would let you win it by default or they'd come can pay you in full, including all legal expenses. The lot owner will be notified through an "intent to foreclose" letter. You can even pay the county sheriff to deliver it in person.

If the lot is financed by a bank, then your HOA would likely win the auction, which removes the builder from the deed....and which triggers the bank to demand payment on the lot (as the first lienholder). Or the bank would buy the lot and repay the HOA for its losses.

Worst case is the auction goes through, the HOA forecloses the deed, which triggers the bank to demand you pay them off for the loan (if one exists) or they foreclose on the HOA and get their land back, which the bank would then pay your HOA dues.

In terms of the lot where a home has been sold, you'll likely not chase the new homeowner until they don't pay their HOA dues.

By the way, ignoring dues payments, letters and collections is cancer to your HOA. Don't hold back on a builder.

Lien the lots and wait.

Make sure you are getting interest and that any attorney fees are shifted to the liened property.