Foreclosure option for failing to pay HOA fees

I have been compiling data on residential airparks since the early 1970s. Over that period of time, one question I’ve heard more than probably any other has been something like this: If a member of an airpark homeowner’s association fails (or refuses) to make his required assessment payments what can be done? My answer has […]

I have been compiling data on residential airparks since the early 1970s. Over that period of time, one question I’ve heard more than probably any other has been something like this:

If a member of an airpark homeowner’s association fails (or refuses) to make his required assessment payments what can be done?

My answer has always been that first whatever the Covenants, Conditions and Restrictions (CC&R) that were established when the association was created is what determines the action that can be taken.

Most often those CC&Rs have said a homeowners association place a lien on the property of an association member who fails to meet his obligations. That doesn’t get the association immediate cash, but it usually results in the account being brought into compliance. If that doesn’t work, the lien will get paid when the homeowner decides to try selling the property or during the closing.

A second option frequently spelled out in the CC&R calls for legal action by the homeowners association against the offending member.

Those options aren’t the world’s greatest. If a friendly arrangement can be arranged, that usually works best.

Recently I read an article by an Associated Press reporter pointing out that in some states and under some circumstances homeowners who fail to meet their obligation can be subjected to foreclosure! That’s a major step upward in the discussions and certainly will get an individual’s attention.

Obviously, that type action is something that is spelled out in the CC&Rs or the documents utilized to purchase the property. Regardless this is an approach that apparently has gained considerable traction in some areas.

You can read more about this in this story.

2 comments

  1. Mike Reardon

    I am surprised that you have not focused on associations and how they impact the quality of life in an Airpark.
    I live in the Falmouth Airpark, Falmouth Massachusetts. I was one of the first lot owners to build my home here. When the developer ran the place, the airpark was a wonderful place to live.
    When the residents took over, things changed dramatically (think Lord of the Flies).
    I have seen the association “go after” a 92 year old resident who adhered to all the CC&Rs and who had relied on the Association’s representations when he built his home. The residents chose to ignore the prior representations of the association, and began to threaten this man with legal action making his life miserable! This gentle man who did nothing wrong could not afford to protect himself from the civil legal money pit and sold his home out of fear of threatened fines he could not afford.
    I have seen another resident pay thousands of dollars in legal fees and fines defending himself from the association who decided, years after completion and approval of this man’s home, that they didn’t like his lamppost! Meanwhile, an association director built…and this is no exaggeration…an 8 foot satellite dish in his front yard!
    I have been to the Massachusetts State house to testify for legislation that would provide some oversight and protections to homeowners living in associations. (Massachusetts has virtually no law in this area)
    Guess who was there to (successfully) lobby against this legislation…a collection of lawyers who represent associations! Associations are quagmire of legal litigation, and the lack of any protections to homeowners makes it an extremely uneven (and expensive) playing field. Association lawyers can count on tens of thousands of dollars in fees whenever someone is targeted by an association.
    Association directors risk nothing in a lawsuit, while a homeowner must risk everything to “prove his innocence”. An Association President in this community actually said…”sue us, we have insurance”.
    James Madison warned that any government, whether of a few or many, without the necessary checks and balances (most important, the separation of powers), is the “very definition of tyranny”.
    I have heard you say that one should “get involved” to properly run an association. You are sadly misinformed. In this association, and in fact ANY association I have seen , if you go to the “meeting” and present a dissenting opinion, you are viciously harassed by the sycophants of the board, or the board itself. You can even find yourself persecuted by the association for a “violation” suddenly found to exist.
    In other words, associations are indeed tyrannies. The lack of a mandated separation of powers scheme, the lack of an independent association “judiciary”, the lack of mandated oversight of elections (I have never seen a tabulation of votes in 16 years here, directors or their spouses count votes and ‘report an “overwhelming” affirmation of this or that), the necessity of “proving your innocence “, spending years in court and tens of thousands of dollars…it goes on and on.
    Many states require a majority or supermajority of residents to change the governing documents. Not Massachusetts. This was the proposed legislation I was involved in. Our “reasonable” directors here refuse to adopt this in our document and have unilaterally changed the documents dozens of times.
    In short, association living presents an overwhelming financial risk to your real estate investment. The unpredictable nature of the whims of boards or even individual directors, and the absence of any checks and balances to constrain those whims, makes this living paradigm unacceptably unpredictable.
    To quote Edward Hannaman, Dept. of Community Affairs in New Jersey, and quoted by the AARP:
    Overwhelmingly … the frustrations posed by the duplicative complainants or by the complainants’ misunderstandings are dwarfed by the pictures they reveal of the undemocratic life faced by owners in many associations. Letters routinely express a frustration and outrage easily explainable by the inability to secure the attention of boards or property managers, to acknowledge no less address their complaints. Perhaps most alarming is the revelation that boards, or board presidents desirous of acting contrary to law, their governing documents or to fundamental democratic principles, are unstoppable without extreme owner effort and often costly litigation.

    Problems presented by complainants run the gamut from the frivolous (flower restrictions and lawn watering), to the tragically cruel (denial of a medically necessary air conditioner or mechanical window devices for the handicapped), [2] to the bizarre (president having all dog owners walk dogs on one owner’s property, air conditioners approved only for use from September to March. Curiously, with rare exceptions, when the State has notified boards of minimal association legal obligation to owners, they dispute compliance. In a disturbing number of instances, those owners with board positions use their influence to punish other owners with whom they disagree. The complete absence of even minimally required standards, training or even orientations for those sitting on boards and the lack of independent oversight is readily apparent in the way boards exercise control.

    …[C]omplaints have disclosed the following acts committed by incumbent boards: leaving opponents’ names off the ballots (printed up by the board) by “mistake”; citing some trivial “violation” against opponents to make them ineligible to run; losing nominating petitions; counting ballots in secret — either by the board or their spouses or someone in its employ — such as the property manager deciding to appoint additional board members to avoid the bother of elections; soliciting proxies under the guise of absentee ballots; holding elections open until the board obtains the necessary votes to pass a desired action; declaring campaign literature by their opponents to be littering; using association newsletters to aggrandize their “accomplishments” but forbidding contrary opinions by owners …; routinely refusing to release owner lists to candidates-despite the board mailing owners (at association expense) their positions (it has become routine for the State to refer candidates to the municipal tax office to obtain the names of their fellow association owners); rejecting candidate platforms or editing them to conform to the board’s idea of fair comment which includes eliminating any criticism at the board.

    Please…in the future do not advise people to attend meetings to attempt change. This is fatally dangerous financially. Instead people need to go to their legislators. We need a body of law that provides protection to homeowners, mandate oversight and transparency of association business.
    Even this is difficult. The deceivingly named “Community Associations Institute” is a trade group of lawyers who represent association and who have 57 chapters lobbying our State legislators across the country. They fight tooth and nail any legislation that would provide protections to homeowners and/or oversight of association boards.

  2. Tim Morrison

    In response to Mike Reardon’s comment (Foreclosure options),

    I actually have no problem with the foreclosure option if other efforts are not helping and this has gone on for years and all owners are treated the same. Of course no matter what you do, some portion of the population will say you were not being fair. Those will of course be the people who never serve on the board themselves or help out in any way. It is unfair to all of the other owners who do pay dues to maintain the runway and facilities. The OP said a lien or legal action are “not the world’s greatest options”. A forclosure is a BIG legal action. No matter how you look at it, if the lien doesn’t do it, you are going to need legal action of some kind.

    I live at X09 which is in Texas. I know that Mr. Reardon’s issue is in Massachusetts so what I say here may not apply to him but the laws may also have changed.

    While I understand that some similar shenanigans did go on here in the past, I have not seen it in a while (perhaps because those that were doing it are no longer on the board) and those that I did hear of from before my time pale in comparison to some of his examples of abuse of power by the board. Did all the pet owners really do what the president demanded and walk their dogs on one person’s property? if so, what does that say about everyone else on the field? I would think that there is no authority given to the board in the covenants to regulate when someone runs their air conditioning. I would think that a lawsuit by the person the board went after would solve that. Furthermore, by Texas property code that took effect in 2011, most all of what Mr Reardon mentioned are illegal.

    The new code does not allow for closed meetings except as a part of a called open meeting and these can only be for specific purposes. To be ineligible to run for the board you basically must be a convicted felon (there’s also something about moral terpitude but not sure how one would be on a government list for that witout being a felon as well). Simply being in arrears of the dues or in violation of the covenants does not disqualify you. Ballots have to be signed (that’ll be new for us here but I suppose, if someone wants to demand a recount it may be useful.

    We found out about these new laws when we engaged an attorney regarding a lot owner who was perpetually in arrears and another who took down the required fencing. Had we not done that, we would have been oblivious to the laws and some of them negate some of our covenants. The law is nominally to protect homeowners from such abuses and was passed because of some well-publicized cases of such. So you might check that your state hasn’t passed similar legislation.

    Our covenants (and others we have checked in the state) allow for foreclosure for someone in arrears but Texas law (even before this new law) does now allow you to foreclose on someone’s “homestead”. The person in arrears here had not occupied the house in over a decade and there were many other issues with his property but it was still listed as his homestead. We had carried a lien on the property in the hopes, as the OP had said, that we would eventually get the money (with interest by the way). The new law required us to forgive any arrears older than 5 years so we lost a year of dues. That has the effect of basically requiring us to sue him once he’s a year or so in arrears or we are just giving him a legal pass.

    So, Mr. Reardon should probably check the current state property codes. The OP should probably check that they are not relinquishing the owed dues by just keeping a lien on the property and whether the could even legally foreclose.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.