HOA Foreclosure and Cautionary Tale

Started by LoriM15 • 12 replies • 325 views

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LoriM15 (Florida)
Posts: 1,009

Posted:

We have a homeowner (single family) who hasn't paid his HOA monthly fees for 2.5 years and also has three $1000 fines that he hasn't paid. Right now he owes over $12,000 and Monday we will be adding another $1000 fine for yet another violation. We have a lien filed and are considering foreclosure since he shows no sign of paying. We hope he shows up at the board meeting next week so we can find out what the situation is. I was researching his property and found out that there is a lis pendens filed against the property due to a lawsuit where he is the plaintiff and being sued by his brothers over a trust issue. The lawsuit reads like a soap opera. However, in Florida it appears that our lien will take precedence and we will probably be able to foreclose if it gets that far.

Meanwhile, another lawsuit on the docket caught my eye. It was filed by a nearby HOA against one of their owners. The owner built a planter bed on a limited common element without permission. The HOA asked her to remove. Eventually they signed a legal agreement that she would remove it but she refused to abide by the agreement. The HOA filed a complaint to force her to remove the bed or to allow them to remove it. At that time she only owed about $600 in outstanding monthly dues. She was ordered by the court to remove it but refused again to cooperate. She claimed many things to delay the lawsuit, including that the HOA declaration didn't apply to her property, that her deed wasn't recorded right, that they sued the wrong person (she changed her name midway through the proceedings) and selective enforcement. Meanwhile she stopped paying HOA dues all together. This lawsuit went on for about two years and the HOA filed for foreclosure. HOA won both the lawsuit and was granted the foreclosure. Despite her filing a bogus chapter 13 bankruptcy, the house got sold and the HOA got their money - and she paid all the attorney fees.

This woman lost her house all because she refused to remove a planter bed and pay $600.

In case you want to wade into this case, Lee County FL 20th District Court, 20-CA-000705 : Compass Pointe Homeowners Association Inc Plaintiff vs R, D L et al Defendant

MaxB4
Posts: 3,513

Posted:

Add that to the list of never living in a HOA again!

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I did a foreclosure and they lost their house over owing us just 2.5K. they even stiffed 4 lawyers and their tenant. The tenant sued and won. The last lawyer I talked to was looking for them to most likely to sue as well.

stupid is as stupid does but yet we still supposed to feel sad and angry at what the HOA done to them.

Former HOA President

CathyA3 (Ohio)
Posts: 6,299

Posted:

The second example is similar to a situation we had here. A (condo) owner wanted the association to repair damage that they claimed resulted from a leaking roof (there was no leak, the stains were nicotine because the owner chain-smoked, and even if there had been a leak in the roof, mold is considered to be a maintenance item and thus owner responsibility). Anyway, this person decided that they were gonna show us and stopped paying assessments. Two and a half years later they "showed" themselves into foreclosure - lost their home and trashed their credit, and the association was made whole.

Both of these are examples of something I've mentioned before. People get so ticked off about something that the original issue gets lost and the fight itself becomes the issue, and they keep going long after it makes no financial sense to do so.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Foreclosure is more of an economics question. If there is no money to be gotten is the main question. Often the HOA is so far down the line in who get paid that the HOA will get nothing. Some say it is still worth it to get the non payer out in hopes that the new buyer will pay their dues.

PatJ1 (North Carolina)
Posts: 568

Posted:

We had an interesting foreclosure in North Carolina a few years ago. Condo unit was a rental. By checking the local deeds office, turns out that when the mortgage was paid off, it looked like the owner stopped paying HOA fees. Then apparently the owner died, and the brother of the owner was deeded the property. Unit continued as a rental.

Brother never paid HOA fees and let the unit go into foreclosure over $5,000 in unpaid HOA dues. Our condo units were on the low end of the market, but I’m sure he could have just sold it for more.

Investor bought it, made minimal improvements, and flipped it. New owner rented it out, and now it has sat vacant for over a year. He does pay the HOA fees.

I’ve lived here for 10 years, and we have one condo unit no one has lived in during that time. Dues are current. Sometimes you must wonder what people think.

Had another when I joined the Board 9 years ago that had over $7,000 in unpaid dues. Filed foreclosure, they paid after asking for a payment plan that was refused. It was also a rental. They finally paid.

AND ANOTHER! HOA secured the unit as a foreclosure during the recession. When the owner FINALLY defaulted on the mortgage, the HOA received nothing. HOA carried it for 3 years.

As an owner-occupied unit resident, I have little patience for any investor who is collecting rent and not paying HOA dues.

It is in the Board’s best interest to develop a collections policy and stick to it. Owner’s need to take read their mail and take the HOA seriously.
File the liens knowing that you have done everything you can do.

LoriM15 (Florida)
Posts: 1,009

Posted:

I don't feel sorry for the homeowner we are looking to foreclose. He's involved in this inheritance lawsuit with his brothers, but according to the lawsuit he not only inherited the house he lives in but also two empty residential lots in another neighborhood worth about $3 million and $500,000 in cash. And yet he has changed lawyers several times because he refuses to pay them. When he was asked in his deposition about the debt he owes our HOA he said that once he paints his house he's going to talk to our counsel and the balance will go away. They asked how much he owes and he said $1500. At that time he owed almost $10,000. I think it's all a game to him to see how long he can go before he has to pay.

There are some people who just should never buy in an HOA. I agree that sometimes HOAs do stupid things or have stupid rules. But you can't buy into an HOA and then say you simply don't want to pay or follow the rules.

LoriM15 (Florida)
Posts: 1,009

Posted:

I forgot to mention that in a conversation with our HOA attorney this week about foreclosure he kept asking if there was a tenant in the unit. He said that in Florida, if a unit owner owes the HOA money and the unit is rented, the HOA can direct the renter to pay their rent directly to the HOA until the debt is paid. And the owner cannot evict the renter for non-payment during that period.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By LoriM15 on 04/15/2022 12:50 PM
I forgot to mention that in a conversation with our HOA attorney this week about foreclosure he kept asking if there was a tenant in the unit. He said that in Florida, if a unit owner owes the HOA money and the unit is rented, the HOA can direct the renter to pay their rent directly to the HOA until the debt is paid. And the owner cannot evict the renter for non-payment during that period.

Aren't you required to have Assignment of Rents specifically stated in your CCRs?

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By LoriM15 on 04/15/2022 12:45 PM
I don't feel sorry for the homeowner we are looking to foreclose. He's involved in this inheritance lawsuit with his brothers, but according to the lawsuit he not only inherited the house he lives in but also two empty residential lots in another neighborhood worth about $3 million and $500,000 in cash. And yet he has changed lawyers several times because he refuses to pay them. When he was asked in his deposition about the debt he owes our HOA he said that once he paints his house he's going to talk to our counsel and the balance will go away. They asked how much he owes and he said $1500. At that time he owed almost $10,000. I think it's all a game to him to see how long he can go before he has to pay.

Doesn't behavior like this just drive a HOA Board to drink? If the Board could show this clown no mercy, then I would support this.

I am on the side of demanding payment; liening; and foreclosing to the extent the law allows, and early and often.

A deal's a deal.

AugustinD
Posts: 3,698

Posted:

Quote:

Darn straight. FS 720 has a long section on this.

MichaelT21 (Arkansas)
Posts: 501

Posted:

Like MaxB4, I own a large number of acres in a conservative state. Someday, when I retire there, I will never have to deal with an HOA again.

Those of you that know me know I am the Board President of our HOA. I hate the concept of HOAs and I hate that we have one where I live. I much prefer a leave it to beaver style of homeownership. However, I choose to volunteer my hours to make our HOA effective and well run, since we have one and all get to pay into one.

Someday, I will live in an HOA-free area and will never look back.

BancsS
Posts: 269

Posted:

Quote:

Posted By MichaelT21 on 04/15/2022 5:19 PM
Like MaxB4, I own a large number of acres in a conservative state. Someday, when I retire there, I will never have to deal with an HOA again.

Those of you that know me know I am the Board President of our HOA. I hate the concept of HOAs and I hate that we have one where I live. I much prefer a leave it to beaver style of homeownership. However, I choose to volunteer my hours to make our HOA effective and well run, since we have one and all get to pay into one.

Someday, I will live in an HOA-free area and will never look back.

That is my preference as well but it will not happen for me. The new development that I will be moving to is under developer control and will be for years to come. There are no amenities. The streets and utilities are city owned. The only common area is an entrance sign with some landscaping to maintain. The dues are set at $8 a month. So far so good...

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