When times get tough and money runs short, HOA dues and assessments are often one of the first things to stop being paid. For most people, electricity and credit card bills come first. But, what happens when a resident falls behind on their dues for 6, 7 or even 12 months? Assessments serve an important and necessary function for the community, and associations need to take a stand when serious delinquencies happen. There are several options available, including liens, lawsuits and foreclosure. Which are the right steps to take against residents who have fallen seriously behind?
Taking a Stand Against Delinquency
Dues and assessments may seem trivial compared to other bills, but they are essential for a community to be able to maintain itself. If homeowners stop paying their HOA fees, associations may not be able to maintain amenities, keep buildings in repair or perform other important duties. The association may also have to collect more money from residents who have kept current with their bills, putting an undue burden on the responsible homeowners in the community.
An HOA may not want to go after members of the community, but doing so sends an important message that delinquencies cannot, and will not, be tolerated. This process should start with taking out a lien on the properties of homeowners who are behind on payment, revoking association privileges that dues and assessments pay for, and other “reminders” that payment is due. If this doesn’t work, the association should consider other measures such as foreclosure.
When to Foreclose
If a homeowner is seriously delinquent and is making no effort to pay, or has no hope of catching up with their bills, an HOA can seek foreclosure on the property. This is a drastic step that many associations are reluctant to take, but it is a useful tool in an association’s arsenal. It sends the message that dues and assessments are a responsibility, and that the HOA is serious about their necessity. It also gives the HOA a chance to recoup the money they’ve lost from unpaid fees, and to allow new responsible homeowners to join the community.
Foreclosure requires a lawsuit in district court, and has an upfront cost in court fees. However, once the process is complete, the HOA will have the chance to sell the seized assets, and the delinquent homeowner will be responsible for legal fees. This makes taking the step of foreclosure worth taking when all other avenues of encouraging payment have been exhausted.
Having a website for the community may help communicate and encourage dues payments!