HOA Foreclosing Homes

[nioka]

I live in an HOA community and was not warned as to their powers or underhanded tactics.

I asked the HOA for permission to have a dying tree that was threatening my house removed. The electric company also told me it had to go. I got the permission to do so and a week later got a fine for $1150 for taking the the tree down. I spoke with an attorney who advised me just to pay the fine. I call that extortion.
The HOA combined the fine with the HOA dues making impossible for me to pay. This is my straw that pushed me into bankruptcy.

I posted this to make people aware of what HOA can do thanks to our legislators.

I strongly urge you that once over BK and back on your feet never ever buy into or rent in a HOA community.

http://www.foxbusiness.com/personal-finance/2010/10/13/homeowners-association-really-foreclose-home/

[justbroke]

The rule of thumb for doing anything that you know is a violation of HOA rules & covenants or local ordinance, is to simply get any ruling in writing. I have trees in my back yard that my landscaper will absolutely not touch a branch. He told me that I need to have HOA do this since the area is "protected" conversation space -- protected by the HOA. That way, I do not get into any trouble and my request and response are in a writing.

I hope that you have it in a writing if you are going to fight them.

Otherwise, the attorney is correct, just pay the fine. In your case, you could ask the board if you can make payments (over a year?) since this is a fine and not "operating" expense money (assessment/dues). Do not let them send it for collections to their (the Association's) attorney as this would just increase the amount due by adding penalties and attorney fees.

[bcohen]

Of course. I would never buy, own, or accept as a gift any property located in an HOA. When you buy property in an HOA, you are essentially renting from the HOA, but stuck with all of the costs of ownership. I have also noticed that HOA's will micromanage residents with silly policies/regulations which far exceed the regulations which a tenant living in an apartment complex must abide by.

For example, around here many HOA's will not allow marked commercial vehicles to be parked on the street or even in a person's driveway, won't allow people to do minor repairs on their car in their own driveway/carport, won't allow any furniture on the front porch of houses, won't allow people to hang up clothes to dry in their backyard, and so on. A reasonable landlord would allow tenants to do all of these things, unless a mess is being made, or a nuisance is being created. That's because whereas a HOA views the residents as a captive audience, a rental company knows that it must keep tenants happy or else they will move.

[justbroke]

I agree mostly with what you write, bcohen, but there are places where Condominium and Homeowners' Associations are not all that bad. Mine, in particular, is in a more affluent area and while I thought they were highly restrictive, most of them make sense. My HOA actually has on-street parking (at least the HOA I selected!), and that includes commercial vehicles. While parking commercial vehicles or on-street parking don't matter for me, I'm sure others like it. We have at least 3 sheriff deputies living in the nearby condos and they (the HOA) seems to love that.

In any event, people really do need to read the HOA/CA's covenants and deed restrictions before purchasing. I do not consider it renting at all. I think it comes down to known where you purchased! During the downturn in home prices, our homes maintained right about at the 2007-2008 prices. I have only ever received one violation and that was to powerwash my sidewalk (and attend to some sod). Other than that, I don't hang clothes outside so I haven't had any issue. (Even apartment complexes that I have lived in do not allow laundry even on enclosed porches.)

A true HOA/CA works to protect all owner's interests and treats them as such. In many cases, it comes down to the board. I'm lucky, I suppose, to be in an HOA that represents me and reflects my sense of community.

[nioka]

Justbroke,

Did you view the video? I believe you will find the video does not share your viewpoint.

As to my pleading my case to the board; I have been told I will not win and that the board has never reversed a fine. As I stated the fine was unjust in that I had permission to remove the tree and afterwards was fined for removing it. I have a written letter of approval dated prior to date the HOA representative said I did not. It clearly proves he lied.

The reason the attorney advised me to pay the fine was not because he thought I was wrong but to the contrary he said I was right and would win a court case. His reason was his fees and the fact that even a win in court covering my attorneys fees would be almost impossible to collect. HOA's are notorious for not paying judgments. His advice to pay the fine was simply to pay the extortion rather than the legal fees.

I have also been assure by three different attorneys that all HOA fees and fines prior to my bankruptcy filing would be discharged. They did advise me that I would be responsible for post BK HOA fees.

My goal here was to warn unsuspecting people the perils of HOA's. The roles and methods of doing business have changed drastically in recent years. The internet is full of vivid videos describing the aggressiveness and even the illegal methods used by current day HOA's.

The HOA I am has an elected board that has no control. There is a corporation operating behind the front of an elected HOA board. That corporation is not interested in the individual homeowner but instead on profits by any means.

[nioka]

I must apologize for some reason the video I thought I posted is not in my original post.

I will try to post it later assuming I can find it again.

[justbroke]

The video does not represent all HOAs or Condominium Associations. I have not known my HOA to foreclose against one property in the last 5 years. I would not argue that there are some HOAs that are much more aggressive. A good HOA with a good Board of Owners, at least the ones in my area, work well with the owners even when there are issues. I have had fines reversed just by asking the management company and it didn't even go to the board. Our HOA board represents about 4,000 homes.

I was not mentioning reversing a fine. I was mentioning asking for time to pay a fine. Since a fine is not "operating" revenue, the board will typically be more lenient when setting up a repayment term and not foreclosing over a fine. If you have a letter that granted and they sent a letter denying as well and you still performed the removal, that's problematic. I do not know why you wouldn't go to the board anyhow with the letter? I am not one to give up by listening to people saying you'll never win, you'll never do this, you'll never do that. Your first recourse has always been the board with the approval letter.

I believe that adversarial owners and HOAs are created because people stop working together. The entire purpose of the HOA is to protect the owners. If your HOA is doing more than that and just trying to make money... then it is not an HOA but a for-profit management company, pretending to be an HOA. If homeowner's are "smart" in that HOA, then they would be wise to actually use their powers to remove the management company.

I would not begrudge you for fighting with your HOA over these issues. If you won a judgment against an HOA, that is not impossible to collect, unless your live in a State that doesn't care about judgments.

Yes, all of your pre-bankruptcy assessments are dischargeable. If you stay, there could be issues if the HOA enjoys a statutory lien (or recorded a lien) and they decide to foreclose anyhow (with a lifting of the stay or discharge of your case).

(I am glad that I live in, apparently, a much better HOA. Our management company works for "us", and they know it. Our board retains the power.)

[nioka]

Justbroke,

I agree that not all HOA's are bad. The problem is that when a person who is new to an area moves into a HOA community. I suppose a more accurate recommendation would be to advise people to thoroughly investigate a HOA before moving in. In my case I never thought that an HOA could have ever been given such power by our politicians.

In the HOA I am in they had a major run in with the state attorney general several years ago. As a result they were hit with a nasty fine. When I bought in here I was told by the buyer's agent I hire all was standard. If this is standard operation then we should all run for the hills.

"Yes, all of your pre-bankruptcy assessments are dischargeable. If you stay, there could be issues if the HOA enjoys a statutory lien (or recorded a lien) and they decide to foreclose anyhow (with a lifting of the stay or discharge of your case)."

I have a question with your statement. I plan to list the HOA fees/fine, (there is only one month non payment), on my
bankruptcy. After this amount is discharged I plan on paying the monthly HOA fees until the bank forecloses. Are you
saying that the HOA can still foreclose under these circumstances? I was under the impression that even an HOA has
minimum requirements before they can foreclose. In my state, TN, I thought one requirement was "at least 90 days
delinquent."

[justbroke]

I wholeheartedly agree on researching the HOA. Just check the local courthouse records and see how many liens they have recorded and/or properties that they have foreclosed upon.

As for homeowners, I think that you nail it on the head. HOAs were not a big thing even when most people heard or read about condominium associations (CAs). I think that some HOAs become so bureaucratic, that they lose sight of why the HOA was created. Being from Florida, I have seen both good and bad HOAs, and everything in between. I understand the HOA protecting the other members from certain aspects of a community-gone-wild, but I also believe that the HOA should be more about community! If the HOA exists solely to fine people and go around taking pictures and threatening fines/foreclosures, then it has become nothing more than a for-profit management company. At least, that's my view.

I also believe that many don't understand what an HOA is. When I signed my mortgage documentation, it had an HOA rider. What it didn't have, in my package, was the actual HOA Covenants and Restrictions (C&Rs)! I would hope that people, as I did, would review the HOA where they are about to buy property, before they buy. Even in that circumstance, it does not mean that the character of the HOA won't change. An HOA needs to be self-policing; and by self-policing, I mean the owners need to police the HOA board. And the HOA board needs to manage the management company, not just grant them blanket authority to act on behalf of the HOA without oversight.

Maybe the problem is that anyone that closes a mortgage in an HOA area, should get a copy of the C&Rs well before closing (7-days?) and review them. I mean I signed the Rider knowing who and what my HOA represented. I wonder if people blindly sign the HOA Rider and don't even know a.) the name of the HOA, b.) the name of the management company, c.) the reputation of the HOA and/or management company, and d.) what the C&Rs are.

I have a question with your statement. I plan to list the HOA fees/fine, (there is only one month non payment), on my bankruptcy. After this amount is discharged I plan on paying the monthly HOA fees until the bank forecloses. Are you saying that the HOA can still foreclose under these circumstances? I was under the impression that even an HOA has minimum requirements before they can foreclose. In my state, TN, I thought one requirement was "at least 90 days delinquent."

An HOA would have to follow "non-bankruptcy" law to foreclose. So, if you are past due and fit the legal requirements for them to foreclose, then they could proceed (once the bankruptcy stay is lifted or ends). I am actually paying my annual HOA dues but discharged the pre-petition dues/assessments. My HOA is not proceeding with foreclosure even though they have a right to do so. They have not done anything in over 3 years on the discharged dues.

It really depends on your HOA and so many variables that it's easier to say... it depends. My HOA is well funded with a strong reserve and very few delinquents. As I stated, I've paid everything post petition, but I have that pre-petition HOA debt still there.

[nioka]

Justbroke,

I did get a bill for the fine of $1150 but never a bill for the HOA fee. When I looked at my HOA account online both the fine and fee were added. I asked if I could pay the the HOA fee separately but was told they do not separate these two items.

I will be filing chapter 7 next week and including the current HOA fine and fees in my debts. Once discharged I realize and am willing to pay the HOA fees. As there is no billing here how do I determine it is time to begin to pay the HOA fees?

[bcohen]

You are making a BIG, BIG MISTAKE if you file for Chapter 7 next week. You are in NO HURRY AT ALL to file, and should do nothing at this time, except wait and see what the HOA chooses to do, if anything. If you file now, you could easily be hit with future HOA fines, special assessments, bond fees, or other unexpected expenses above and beyond the normal monthly dues. The monthly dues could also increase significantly, beyond the point where you could afford them.

If you hold off filing, you can still quit paying your mortgage and HOA, and you can still continue living in the house. If and when the HOA tries to sue you, or the mortgage lender tries to foreclose, you can think about bankruptcy at that point.

[nioka]

bcohen,

I agree with you about the possible HOA actions. However, If I delay filing can't the HOA do the same thing later when I do file?

[bcohen]

bcohen,

I agree with you about the possible HOA actions. However, If I delay filing can't the HOA do the same thing later when I do file?

Yes, however the idea is that you wait to file until the house is out of your name, either due to the mortgage lender or HOA foreclosing. In that case, you would no longer owe HOA dues or penalties going forward, and whatever balance is owed to the HOA would be included in your bankruptcy and discharged. If you file now, the HOA could still assess you fines or special assessments after the bankruptcy filing date and you would owe that money (and could even be sued for it). You would also have to keep the monthly dues paid current as well. The HOA's collection agency/law firm will show no mercy since they know that you have already filed for bankruptcy, and cannot do so again for at least 8 years.

Remember, that bankruptcy only discharges pre-petition HOA dues/fees/fines, and that as long as the property remains in your name, you will owe these monies going forward. If you wait to file until AFTER the house is out of your name, then you will not have to worry about owing any more money to the HOA for any reason.

[nioka]

bcohen,

My hope is that either the bank or HOA forecloses. I have read a few articles about HOA evicting without taking possession and continuing to charge the HO dues, late fees, lawyer costs, etc. Their concern is to rent the property until the bank forecloses on them.

One thing I should mention here is that one attorney I asked about the HOA complication told me not to be concerned because my income is limited to SS and an ERISA pension. He said there is no way they could collect a dime from me.
My only concern is that maybe I would like to rebuild by credit, but then I am 70 years old, why should I care.

I am posting this link for others to see the dangers of living in an HOA.

http://www.foxbusiness.com/personal-finance/2010/10/13/homeowners-association-really-foreclose-home/