What Happens if You Are Unable to Pay Your HOA?

If you live in a planned housing development managed by a homeowner's association (HOA), you are liable for monthly dues that pay for maintenance and upkeep of the common property. Prospective buyers should be well informed on HOA fees before occupying a townhouse or condominium, as the dues can make up a significant percentage of the home expenses. If you fall behind on HOA fees, even by a day, you may face consequences.

Legalities

As a condition of ownership in a planned development, owners are under a legal obligation to pay any HOA fees. The fees pay for maintenance of common areas, such as lawns, driveways, sidewalks, pools, clubhouses and the like. In addition to the monthly fee, a HOA can levy a one-time assessment to pay for improvements and renovations to the common areas or building exteriors. HOA assessments can also arise if the association is lacking a reserve fund to keep up payments on maintenance.

Delinquencies and Liens

Seeking to avoid special assessments to resolve a lack of funds, a HOA will take prompt action if a homeowner fails to keep up on HOA fee payments. This may begin with an overdue notice and a demand for payment of the arrears within a specific time limit. The HOA may deny the use of facilities such as pools or fitness rooms; if the property is rented, then the association may have reserved the right to demand payment of fees from the tenants. If the delinquency continues, the HOA has the legal authority to place a lien on the property. The lien gives the association a claim on any proceeds if the house is sold, up to the overdue amount plus interest.

Collections

The association may begin legal action if fees go unpaid for more than 30 or 60 days. A formal demand for payment can be followed by a lawsuit and a motion in civil court for a garnishment order. If successful, the motion allows the association to request seizure of bank accounts, wages or other assets by the sheriff's department. This is an expensive alternative for both the HOA and the homeowner, as attorney fees and court costs may be enforced on behalf of the prevailing party in the lawsuit.

Foreclosure

If sufficient time passes without payment of an arrearage, a lien holder has the right to foreclose on the property. In effect, the owner is forced to sell the dwelling at a public auction in order to pay the arrearage. A foreclosure action entails considerable expense, and will not succeed in payment of back HOA fees if the house is sold for less than the outstanding mortgage amount. For prospective buyers and tenants, it's a good idea to read through the association bylaws before taking possession. The bylaws should explain the procedures to be undertaken by the association's board of directors in the event of unpaid HOA fees.