Our HOA hasn't foreclosed on residents for years because board members are afraid they will get shot.

Started by JackS20 • 23 replies • 554 views

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JackS20 (North Carolina)
Posts: 271

Posted:

Our HOA hasn't foreclosed on residents for years because board members are afraid they will get shot.
I'm not joking. We have people that have not paid dues for several years.

When I signed up for this volunteer job I never realized I could get shot for doing what's in the HOA's best interest.

there are several stories I've read online where HOA board members have been shot sometimes a year latter.

Latest one, HOA prez and husband got shot for arguing about closing the laundry rm door. People shooting over dogs, fences, foreclosures, etc. How about hte lunny guy in Canada that thought the HOA board was contaminating his condo with EMF radition and whet on a mass shooting sprea last month?

Foreclosures I can kind of see how the rage might build up, but the other stuff is just completely crazy. Why should I sign foreclosure papers with my neck on the line?

With gun violence showing no sign of decreasing, if anything increasing after the SCOTUS ruling a few months ago, what can one do?

ElleN (Idaho)
Posts: 4,420

Posted:

Many HOAs don't ever foreclose. They record a lien and that's it. When the property is sold, the HOA gets its money.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Jack,

Keep in mind that one can find all sorts of retaliation stories about almost any action.
This is because the stories that don't have retaliation simply don't make the news.

You will likely never read a story that We foreclosed on a person who hasn't paid for years and the new owners are great.

I would certainly not encourage your board to foreclose if they have concerns over personal safety.

I would encourage your board to perfect the lien by filing it with the courthouse.
Filing a lien does not require the board forecloses.
It will help to ensure that the Association is paid if the property is sold.

The unfortunate thing is that the more members who are not paying requires increased assessments on those who are paying so the Association can continue to meet it's obligations.

Obviously, the choice is the boards.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Sticking to liens can make financial sense as well during times when the real estate market is fairly active and the community is attractive to buyers.

It costs the association money to pursue foreclosures. These costs are passed on to the delinquent owner, but if that person can't or won't pay then the HOA risks digging itself deeper into the hole.

By contrast, filing a lien is much less expensive and requires no further action until the home sells. And the presence of the lien can also create some incentive if the homeowner is unable to re-finance a mortgage because of it.

Deciding whether or not to foreclose often isn't a straightforward decision, and there are a number of factors that go into it. The obvious one is whether or not the delinquent owner has a mortgage and has also stopped paying that as well. Related issues include the amount of equity the homeowner has in their home, and if the mortgage is the prior lien (which is common in many states). If the mortgage is the prior lien and the total amount owed exceeds equity, then it's very unlikely that the association will see any money when they foreclose. That doesn't mean the foreclosure shouldn't go forward, though, since it stops the bleeding and gets a new into the home who hopefully will pay their assessments.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Is this assumption or conjecture? There are many people even on this forum that will not foreclose. Why? Simply they are not comfortable taking someone house away. It sounds heartless.

The truth is a foreclosure is just a stop the bleeding. It takes a year or more to complete. It is not a simple foreclose and they are gone. Plus not guaranteed to get paid. The bank is paid first even if the HOA does it. It may not be worth the time or effort.

A lien does make more sense in some situations. Others foreclosure does. Each situation is different and different for everyone

Former HOA President

JackS20 (North Carolina)
Posts: 271

Posted:

liens expire ever 3 years in my state. we've already paid the lawyer for 2 liens, and we'll be going on a 3rd lein soon.
the $600 cost to get a lein is about the same as the dues that are owed, since our dues are $200 a year.

so we should just pay $600 for a new lien every 3 years? Hope future boards do the same and then one day in the future possibly get paid?

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By JackS20 on 01/03/2023 11:45 AM
liens expire ever 3 years in my state. we've already paid the lawyer for 2 liens, and we'll be going on a 3rd lein soon.
the $600 cost to get a lein is about the same as the dues that are owed, since our dues are $200 a year.

so we should just pay $600 for a new lien every 3 years? Hope future boards do the same and then one day in the future possibly get paid?

Don't your governing documents allow adding attorney's fees and interests to the assessments owed?

Are you sure only an attorney can record a lien?

As I think someone said above, sometimes liens are automatic and do not require recording. Then the HOA has to make sure the title company knows about the assessments and interest owed, and the sale is stopped until the seller understands she will pay what is owed from the proceeds of the sale.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By JackS20 on 01/03/2023 11:45 AM

so we should just pay $600 for a new lien every 3 years? Hope future boards do the same and then one day in the future possibly get paid?

That is one option.

Another option is to file the lien and then foreclose (most of the time to stop the bleeding to the Association).
However, you expressed concerns for your personal safety with this option.

The final option would be to do nothing at all and simple let those individuals have a free ride.

ND (PA)
Posts: 792

Posted:

How many homes in your HOA?
What do your $200/year assessments pay for?

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Jack

Keep in mind that additional costs and penalties can be added to the amount of dues owed. $200 per year for say 2 years can easily become over $600 owed. Stay with the lien renewals. Also consider small claims court.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Whatever money you spend on the lien filing is to be part of what is owed as well. I am not sure I would foreclose for $200 or the $600 owed. I would make sure they would know they have a lien on file. Which would send to their house via registered mail they have to sign for it.

My question is besides hiring a lawyer to file the lien, how is your HOA notifying the person who owes?

Former HOA President

WendyM5 (North Carolina)
Posts: 1,522

Posted:

Quote:

Posted By MelissaP1 on 01/03/2023 1:39 PM
Whatever money you spend on the lien filing is to be part of what is owed as well. I am not sure I would foreclose for $200 or the $600 owed. I would make sure they would know they have a lien on file. Which would send to their house via registered mail they have to sign for it.

My question is besides hiring a lawyer to file the lien, how is your HOA notifying the person who owes?

I have no idea. I've asked pm for that info and never got it
Apparently lawyer handles it all

Even emailed pm to ask if I can come get our box of legal paperwork and no response
Yet pm company wants my ass on the line by sig ing foreclosure initiation paperwork. Other board members want nothing to do with it. They think I should sign it but they wont

vis ta vie

LetA (Nevada)
Posts: 2,679

Posted:

We may not get the legal right to foreclose here in Nevada if the legislature gets their way.

IMHO liens should never expire and should remain recorded to the deed until PIF.
Since the foreclosure debacle here in Nevada where BOD's were foreclosing on homes for as little as $1200,
the legislature nipped that in the budd 4 years ago. Now HOA's must notify the mortgage lender their intent to foreclose
the mortgage lender must send the HOA 9 months of assessments in arrears.

Now there is going to be a bill presented during the upcoming legislative session that will prohibit HOA's from
foreclosing and making it easier for deadbeats to beat the system.

KerryL1 (California)
Posts: 14,550

Posted:

Wendy: your board at a board meeting must vote on whether or not to foreclose. So far as I know, the prez doesn't have the authority to make that decision unilaterally.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I would never assume that the lawyer handles it all. That's not enough information. The lawyer does handle it all on the part of filing the lien. However, notifying the person one is on file most likely not. It is a "public" record but unless you know or read what is considered "Public" information not going to know about it. For us the Public notifications were published ONCE a week in the Classified section of the local newspaper under "Legals". Who even knows that exists in their local newspaper??? However, that is the "legal" public notice requirement the lawyer could do if "handling it".

My preference is for the lawyer to file and of course have the public posting. However, I would also send the person a certified letter a copy of the lien to their residence. Also would send it to BOTH the HOA address AND (not or) their known address if it is NOT in the HOA. This way I know the HOA sent the person notification of the lien or intent to foreclose.

Former HOA President

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By WendyM5 on 01/03/2023 2:37 PM

I'm a bit confused, as I expect Melissa was directing her question to Jack, the original poster.

Are you in Jack's Association?

KerryL1 (California)
Posts: 14,550

Posted:

Say, Melissa, are you sure about your assertion? "There are many people even on this forum that will not foreclose. Why? Simply they are not comfortable taking someone house away." I don't recall anyone her writing that sentiment.

LetA (Nevada)
Posts: 2,679

Posted:

Quote:

Posted By KerryL1 on 01/03/2023 5:05 PM
Say, Melissa, are you sure about your assertion? "There are many people even on this forum that will not foreclose. Why? Simply they are not comfortable taking someone house away." I don't recall anyone her writing that sentiment.

Not foreclosing because board members "feel" isn't it about fulfilling their fiduciary duty to execute the governing documents as written?
What happens when assessments are raised and the owners sue the board for malfeasance? If there is an active and confirmed threat to
the board then the police and courts get involved.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I do not want to put words in someone's mouth but it has been posted by a few regulars over the years they would not feel comfortable foreclosing on someone. That is understandable. It is a really tough decision and not fully worth the effort. It is a last step one should take.

We did ours after years of threats and no payments. They threatened to burn the place down in the past. It is a long story but took on the foreclosure anyways. It took over a year to finally get through it. Was worth it in the end but it truly was a struggle.

Former HOA President

TimB4 (Tennessee)
Posts: 21,059

Posted:

I think the issue is foreclosing on someone you know vs. foreclosing on a stranger.

If the Association is large, one or two chronic delinquent accounts can be absorbed and play the waiting game.
If the Association is small, one or two chronic delinquent accounts can be an issue but more likely someone on the board knows the individual.

JeanneH3 (North Carolina)
Posts: 158

Posted:

Quote:

Posted By ElleN on 01/03/2023 9:53 AM
Many HOAs don't ever foreclose. They record a lien and that's it. When the property is sold, the HOA gets its money.

I do wish there was a "like" button for posts.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By MelissaP1 on 01/03/2023 6:03 PM
I do not want to put words in someone's mouth but it has been posted by a few regulars over the years they would not feel comfortable foreclosing on someone. That is understandable. ... snip ...

When I was a newbie board member, I was really uncomfortable with the idea of foreclosing on someone I knew. A couple years' worth of attitude from our two chronic delinquents cured me real fast, since they had no problem whatsoever with stiffing their neighbors. And our bylaws list foreclosing on non-payers as one of the duties of the board - it isn't optional beyond the normal sorts of evaluations you go through when deciding that it makes financial sense for a particular case.

The decision to foreclose will boil down to inflicting pain on one person vs. inflicting it on everyone else. Obviously there are many reasons why someone may not be paying their assessments, and some of those reasons will be things outside of the person's control. Those can be difficult. But for others it's a choice - and if the HOA forecloses, it's not the HOA that's causing their problems, the person is doing it to themselves (they're unlikely to see it that way, though).

JohnC46 (South Carolina)
Posts: 14,265

Posted:

If considering a foreclosure one of the big questions is there money to pay everybody off? Meaning an HOA forecloses but there are claims with more weight then the association has as in they get paid first. As an example mortgages, 2nd mortgages, etc. I own my home as in there is no mortgage and no liens so there would be money to be made.

SheliaH (Indiana)
Posts: 6,964

Posted:

Quote:

Posted By LetA on 01/03/2023 5:13 PM

What LetA said.

We send a copy of the collection policy to the homeowners every year, along with the upcoming year's budget, so if they read it, they know (1) the account will be sent to the attorney if it's not bought current within 45 days (2) the account will also be accelerated, meaning all remaining assessments for the year will become due and payable (3) homeowners must reimburse the association for all its collection costs and attorneys fees and (4) collection efforts may include foreclosure. Want to avoid that drama - pay your bills in full and on time! If you're having financial hardship, let us know - I'd rather work with someone who's being honest about the situation and makes the effort. We had one homeowner who needed nearly four years to become current, but she did before finally selling the house. Another former homeowner had his house taken by the bank, but the assessment judgment stayed on his credit report and a few years after he left, he came to our property manager's office with a check to pay it off - a very pleasant surprise.

I understand people being hesitant because too many folks walk around packing (and it may get worse because now nearly half the states have passed legislation where people don't even need a gun permit). I also think this board might have become intimidated by people cussing and fussing, but they're simply blowing smoke up your arse. A summons can be great for ending all that nonsense and sheriffs don't usually play when they stop by to deliver related notices.

That said, homeowners need to understand it's unfair when some folks don't pay and the others have to pay more to supplement those assessments. A few years ago, I went to a CAI seminar where an attorney suggested it may be best for associations to set their budgets based on the percentage of people who do pay, while continuing to go after the deadbeats. This could help prevent deficit spending, but it would also mean some projects might not get done and you'd still have to increase assessments to make this work.

As a former board treasurer, I didn't take any pleasure in recommending foreclosure, but I'm fortunate in that all my colleagues understood what was at stake and the presidents I served with didn't hesitate to sign the paperwork. Most of the folks who got foreclosed on were under a lot of pressure from other creditors, so if they wanted to empty bullets into people, they'd have a long list. That's why some declared bankruptcy and the rest up and abandoned the property (thus starting a dance with the bank and many of us know how that ends). If you have people that volatile, police should be told, along with the association attorney.

I say do what's necessary and pursue the foreclosures - being a board member sometimes mean doing things people don't like, but if you're honest with the other neighbors, they will support you. If it's been years since the deadbeats have paid, you may not be able to get that money, depending on the statute of limitations in your state. For more recent assessments, you may not get all that back either, but as Melissa noted, it's more about stopping the bleeding. Better to get the deadbeats out and hop the house is sold to someone who will pay. For the balance, you may be able to file a 1099-C with the IRS. That will end your collection efforts, but that also means income for the deadbeat, which could be taxed by the IRS. Check out this link for more information and then talk to your attorney and perhaps your accountant to see what your options are. Good luck!

https://www.irs.gov/forms-pubs/about-form-1099-c

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

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