Over 75 million Americans are part of an HOA. This comes out to almost a quarter of the country's population.
Homeowners' associations often come with their own set of rules, though, and those rules are unique to each HOA. The HOAs are responsible for enforcing these rules, and the penalties for breaking them can be severe.
The worst penalty an HOA can hand down is HOA foreclosure. This is when the HOA takes possession of your house. This can happen in very specific circumstances and isn't common. HOA foreclosure is also easily avoidable, and we'll talk about how you can avoid it here.
1. Failure to Pay Assessment Fees
Being part of a Homeowners' Association means paying fees each month to maintain the association and cover any necessary repairs or services. HOAs work like their own tiny community, with costs for everything being split proportionally among members.
Failing to pay these fees is the biggest reason HOAs foreclose on property. However, they don't do this immediately. First, they'll set up a lien. A lien is a condition an HOA can attach to the home which states that the current resident can't sell, refinance, or otherwise make changes to the home until all fees are paid.
If a month passes after you've received a Breach of Contract letter, the HOA can foreclose on your property, either by filing a lawsuit or following certain legal procedures.
2. Violating the Contract
Technically, the only reason an HOA can foreclose on a home is unpaid dues and assessments, along with other unpaid fees. This gets more complicated in practice, though.
Joining an HOA involves signing a contract. The rules in the contract can govern everything from lawn care to holiday decorations. The organization can't mandate that everything must be done one specific way, but it can forbid certain things and encourage others.
If a resident were to violate the terms of the HOA agreement, the HOA has the power to charge a fee. This might not seem like much in the moment, but these fees can add up if you ignore them or continue to violate the HOA terms.
3. Corruption
While it's not common, HOA members can sometimes misuse their power to push out residents. As a general rule, though, it's easier to keep residents satisfied and included.
Regardless of why foreclosure is occurring, there are some things you can do to stop it. Reread the agreement you signed. Sometimes, HOAs can accidentally violate their own rules, which you can use to argue your case. You can also contact a lawyer and see if everything is legal.
Try talking to the HOA itself and see if there's anything you can do to negotiate or pay your fees in installments. They might be willing to help.
Know How to Stop HOA Foreclosure
Being in an HOA comes with the risk of HOA foreclosure. HOA foreclosures are almost always the result of unpaid fees. If you're facing HOA foreclosure, getting advice from an attorney is important.
You can also get professional advice from an HOA management company like PMI Salt Lake. We work with HOAs and HOA homeowners in South Jordan, UT, and are part of a national property management franchise with over 20 years of experience. Check out our homeowner resources or get in touch to speak with one of our experts.
