Can An HOA Take Your Home?

Collecting past-due homeowners’ association (HOA) fees from homeowners can be stressful for everyone. Delinquency can lead to a variety of consequences, with some HOAs even taking legal action. Homeowners in financial trouble may ask themselves the question: “Can an HOA Take Your Home?” Unfortunately, in some cases, the answer is yes.

In a worst-case scenario, mounted delinquencies may result in foreclosure and put homeowners at risk of losing their homes. Luckily, there are ways to prevent getting into this situation in the first place. Roy Johnson, Sr. Relationship Manager for Associa Abstract Services and HOA Collection Services, oversees a network of specialized collection agencies. Here, he shares tips on how to work with collections agencies and take other measures to avoid foreclosure on your HOA home. Read on.

What Happens When You Don’t Pay HOA Fees?

When you buy a home in an HOA, you sign a legal agreement and commit yourself to following community rules and fulfilling your duties as a homeowner. While every HOA operates differently, there are penalties if you don’t hold up your end of the agreement, including not paying your HOA fees or assessments. Here’s what might happen if you don’t pay your HOA fees:

•       Violation notices. Typically, this is the first thing that happens when a payment is missed. An HOA violation notice will explain the late fee payment, what’s needed to become current, and what will happen if non-payment persists.

• A non-compliance hearing. If residents don’t respond to violation warnings and their fees remain unpaid, the board may notify the homeowner of a non-compliance hearing. During this hearing, the board will decide how to proceed. 

• Fines. The HOA board could impose fines for late or unpaid dues and charge interest on any delinquent payments until dues are current.

• Loss of amenity rights. Those who are delinquent or fail to pay HOA dues may be restricted from using the amenities until they’re caught up.

• A lien on your home. If a homeowner still hasn't complied, the next step may be a lien on their home. A lien is a legal claim that a creditor, like an HOA, places on a property to recover unpaid debt. This is usually the last step a creditor will take to collect an unpaid debt.  
• Foreclosure. The most serious consequence of non-payment. If a homeowner has yet to settle their debt to the HOA, the lien allows the HOA to foreclose on the property and gain access to it.

Can an HOA Take Your Home?

Yes, an HOA might be able to take your home. However, foreclosure is typically the last remaining consequence after a homeowner repeatedly fails to respond to written warnings about late payments, fines, and dues.

Every state is different, and some areas have restrictions on HOAs foreclosing on a home. For more information, check local and state laws and HOA rules and regulations or consult an attorney with association law expertise.

Even though it may be an option, HOA foreclosure is a severe step that can have a major impact, causing emotional and financial hardship for families. It shouldn’t be used loosely, and association leadership should always seek alternative methods to resolve collections issues.

 Read More: Step-by-Step Guide to Developing an HOA Collections Policy

How to Resolve a Debt with Your HOA

HOAs don't want to put residents in foreclosure. A true last resort, foreclosure is a time-consuming and costly process. The best way to avoid foreclosure is to proactively resolve debts. Here’s how:

Be open with your board.

Your HOA board works hard to maintain a strong sense of community. Foreclosure can threaten that culture and create tension and division among neighbors. If you’re at risk of foreclosure, be open and honest with your board about your struggles to pay. While every HOA should have a standard collections policy, some may be able to consider unconventional methods to collect delinquent assessments. As always, review your governing documents to ensure repayment methods are within the law.

Does your collections policy work? Read “HOA Collections Policy Quick Tips” to learn how to improve your collections efforts.

Reach out to the HOA’s collections agency.

Usually, a homeowner is sent to collections by an association approximately 90 days after nonpayment. If you have an extended delinquency and have made efforts to connect with your board, also make sure to communicate with the collections agency, too. Collections agencies, like Associa’s, often have compassion and understand that residents are simply in tough situations, not intentionally ignoring responsibilities.

With that in mind, collections agencies can help create a plan tailored to your unique scenario. Striving to help homeowners find ways to stay in their homes, our relationship-based collections agencies aim to find solutions without legal intervention. The collections agency may be able to adjust the payment plan, including: 

• Timeline: The number of months homeowners must make payments. 
• Installment amounts: How much a resident is expected to pay each payment period.  
• Interest/fees: Fees applied to unpaid balances during the duration of a payment plan, if necessary. 
• Late payments: The consequences of late payments within a payment plan. 

Apply to the Homeowner Assistance Fund.

The Homeowner Assistance Fund provides financial help from the federal government through state agencies for those affected by events like the COVID-19 pandemic. Homeowners who qualify may be able to receive funds to prevent delinquencies, loss of utilities, and, most importantly, foreclosure. If you’re facing foreclosure, look into the Homeowner Assistance Fund to see if you qualify.

FAQs About HOA Violations

The answer to the question “Can an HOA take your home?” may be yes in some cases, but homeowners who are struggling deserve a chance to recover and keep their homes. If you’re in debt, consider talking to your board, reaching out to the HOA collections agency, and applying to the Homeowner Assistance Fund.

Not paying dues is a violation of HOA rules and regulations. Homeowners should do everything they can to avoid violations, but doing so requires understanding of how they work. Explore our “Top Frequently Asked Questions About HOA Violations” ebook. In it, you’ll find answers to questions like: What are violations? What happens after a violation is reported? And much more.