Recover Delinquent HOA Dues

Our board is trying to figure out how to get delinquent dues. The threat of a lien is meaningless since this is a relatively new community with a lot of investor owned homes. Due to the drop in home prices and the sub-prime mortgage debacle, most of the owners who owe HOA dues have little or no equity and many owe more to the mortgate company than their properties are worth. Consequently, they could not care less if we take the property, and we don't want the properties, quite honestly.

One thought is to sue owners in small claims court. Anyone know of a reason why we can't do that? Anyone out there try that method and if so, how did it go?

HOAs (even those that are non-profit corps) can go to small claims court in AZ. Or as Susan suggested, place a lien on the property. However, in AZ at least, that lien can only be collected when the property is sold. Check your state laws on this. Also, any means available to any other creditor to collect can be used by the assn, i.e. garnishment of wages, etc. Check with an attorney to see what method would be the best. At any rate, something should be done!

Sorry, hit "Submit" before I was done. If they have renters in the unit, go to court for the right to have the renters pay the association directly. You need the lien to protect the association in case one of them gets lucky and sells their unit, or if your state has a "super lien" then you can at least collect some of the back assessments from the mortgage holder.

The problem with most small claim actions is that the judge tries to "settle" not decide, and there is usually no appeal. Before going there decide if you have some method of enforcing or collecting on the decision before taking that step.

Joe

Mary is not correct. In Arizona an assessment is an automatic lien until paid. We do not need to wait until the property is sold to collect on an assessment lien. We can foreclose on $1,200 or any amount after one year whichever occurs first. It is liens on fines that you cannot foreclose on but must wait until sold to collect. (and those liens require a court judgment before you can even file a lien.) But you said you don't want to foreclose, and I don't blame you because you would be doing the work for the prime mortgage holder(s) and probably not end up with anything yourself.
Wage garnishment requires a court order. Not easy (except for child support) if they are in the military or their income is from certain sources. They can file for bankruptcy and halt garnishment immediately. Giving the debt to a 3rd party debt collector (which can include your attorney) falls under the Federal Fair Debt Collection Practices Act which gives debtors certain rights, one of which is to write the debt collector and tell them to stop contacting them, which they must do except for certain circumstances.
I would still file a lien if you can do it yourself to avoid tying up more of your funds with an attorney. That's just in case the member is able to stay in the home with the hope that this housing market recoups before the property is sold.

If this should be a separate thread, please advise. But I think it is along the same line and have asked this question at our HOA. We have an owner who routinely gets liened for overdue assessments, then pays up and the lien is removed. This has gone on for years. It is as though they consider us their payday loan store. Would going to small claims court affect their credit more than a lien?

Tony,
You have brought up the real problem of EFFECTIVELY collecting on delinquent assessments when there is insufficient equity to justify foreclosure. This is a problem many are facing with the sub-prime mortgage fiasco. You could try encouraging their mortgage company to foreclose (rather than the HOA foreclosing). Foreclosure could result in losing some of the past due assessments, but could prevent future losses. You can also go to court to try to garnish the owners income; such as, rent(if any), wages, and bank accounts.

Tony-

Do you lien the property, as well? Or do you obtain the final judgement and then file it against the property, too? Not sure how the system works.

I can see that we have a lot of amending of our to do- I think this is an excellent idea for the chronics. I'm knocking on wood that we haven't had a problem with foreclosures, as I know it is a tougher situation for the property owners.