Foreclosure frustration

Sadly she is getting bad advice. People like this know how to game the system just like
eviction proceedings. Banks are even worse at dragging their feet at foreclosures.
Does she have a lawyer? She should just list the house for sale on the MLS and use the profits
from the sale to satisfy the HOA and take the rest and run.

Your HOA is too late on foreclosure. The bank is doing it. Make sure you are still have lien on file. Even if the HOA has foreclosed the bank gets paid first.

All a foreclosure does is stop the bleeding. Makes no profit. Biggest mistake is the HOA owning that property. Plus there is the right of redemption. That can be up to a year in some states.

Your board is a bunch of idiots. There should have been a collection policy in place and this should have went to the attorneys 2.5 years sgo.

You can't say that the board is "a bunch of idiots" without knowing the details of this particular situation.

The decision to foreclose can be nuanced, and will need to balance the odds of collecting anything vs. the costs of the foreclosure itself. In some cases you may be successful - in others you'll be throwing good money after bad. Sometimes the best thing to do is simply to keep the lien in place.

Unfortunately the board often won't know what the best decision was until after the fact.

Why would you ever sue to collect debt? That is the worst option.

Completely disagree.
The Lien you speak about is a simple property (often treated as a mechanics) lien, not a judgement lien.

In some States, you must obtain a judgement lien to foreclose.

A judgement also provides other alternatives to collecting the money owed (although, it does take extra time, money and energy):

See Civil Judgments vs. Judgment Liens: What’s the Difference?

What Is the Difference Between a Property Lien and a Judgment Lien?

You Have a Judgment, Now What? Mastering the Art of Judgment Collection from the American Bar Association

What an association decides to do is up to their board.
I would suggest research and, if needed, discussions with attorneys.

Yes Tim. I am using phone. A lien would be for property not a judgement lien. My opinion suing to get a judgement ruling not as strong as making sure one can not sell house without paying. A lawsuit judgement one can walk away without paying. They can sell their home without paying.

It is hard to garnish wages when have no access to social security number or job information. You never give your HOA social security number or need to know your job.

It is not an easy process if you do not have anything outside of HOA address and name on it.

18% per year = 1.5% per month

18% per month is 24.5% per year.

It's 18% per year. Last month she paid about $165 a month in interest. Her monthly assessment was $373 plus there was a $25 late fee. It's adding up quickly.

That goes to the court. Not sure they share it to other parties.

I read these stories and they fortify what I knew. It is possible to "game" the system and continue to live in a home and pay no bills. Eventually it will end but at what cost to people/associations owed money? These type people have no shame.

Good Lord, this homeowner must be a twin to a homeowner who gave our board fits during my 10 years of service (including five as treasurer!) Sadly these folks know how to game the system, as John noted. In our case, the homeowner filed for bankruptcy at least three times as I recall, and every time, the bankruptcy would be dismissed because the homeowner wouldn't do something ordered by the court, and the entire mess started over.

Once, I took a day off from work and accompanied our attorney to the bankruptcy court because I was going to talk to the court about this owner and how much the association had lost in dealing with the nonsense. Instead, the owner's attorney announced he'd resigned from representation and the judge discharged the bankruptcy AGAIN. The last time I heard anything about it (I was off the board by then), I was told the bankruptcy court finally got fed up and said to the owner and mortgage company enough is enough - either pay what you owe or you won't be allowed to file again.

I believe the bankruptcy code changed a few years ago to try and stop this constant filing of Chapter 11 or 13 for similar reasons (can't remember which one applies to individuals). As for the tax liens, the government trumps everyone, and all you can do is hope the house sells for enough money to pay the HOA after everyone else gets theirs.

All of that said, Dean is right - the board should have jumped on this two years ago, because the longer you delay in going after delinquent assessments, the harder it gets to collect. The mortgage companies don't care because they know they have a secured interest and will get their money before the HOA does. One of our former presidents told me he'd heard they often go after the expensive houses first and work their way down. The paperwork may have also gone sideways or the note's been sold to who knows who and you may have to look for whoever owns it now and then notify them of what's going on.

It may or may not be time to cut your losses, but if you do write it off, the association may be able to file a 1099-C with the IRS for the amount owed. Since the owner hasn't paid anything, this would be considered income, which means taxes, and as those commercials say "don't mess with the IRS" - the owner would then have to talk to them about payment (hopefully, they won't forgive all the debt). Talk to your association attorney and accountant to see what your options are, and good luck.