Being late on your HOA due payments could cost you your home. I read a very interesting article on this topic today. Some home owners across the country are facing foreclosure, but not from action by their mortgage company. Home Owners Associations (HOA's) are the latest to pursue the foreclosure option to attempt to get delinquent home owners to pay up.
Some home owners are viewing their HOA due payments as optional. Quite the opposite is true though. If you live in a community with a mandatory HOA, then your dues are just that, mandatory. Your HOA payments can go toward a variety of things for the community.
The monthly HOA dues for a condominium typically covers a variety of items. Most commonly, the HOA dues cover common area maintenance and upkeep, common area liability insurance, exterior building maintenance, exterior building insurance coverage, garbage collection, tennis courts, club house, swimming and other such amenities. Some HOA's may also include utilities such as cable TV, Internet, or water service.
In a PUD (Planned Unit Development - attached or detached), the dues may cover common area maintenance and upkeep, common area liability insurance, garbage collection, tennis court, club house or a swimming pool. In some cases, exterior building insurance is also included for in the HOA dues.
Nearly 30 states, including Georgia, allow HOA's to go to these lengths to collected what is owed to them. Many states do allow for the HOA's to use a variety of means to collect the outstanding dues. Liens to the property may be added or the home owner's wages and bank accounts can be garnished with a court's permission. Access to association amenities can be blocked for non-payment.
HOA's typically only choose to take these drastic measures when they get nowhere else with the home owners. Legal fees can add up to thousands of dollars. Without enough home owner's paying their dues, an HOA may soon find itself insolvent. The home must be at least $2,000 behind in their dues before an HOA in Georgia can initiate foreclosure proceedings. To pursue the foreclosure, the HOA must file a lawsuit. The time frame generally runs 4 months to sometimes over a 1 year. Should the mortgage company foreclose first, the HOA's are typically left with nothing.
HOA delinquency and budget issues may also impede new home owners from obtaining financing. PUD's generally do not require any review by the lender. A condo, on the other hand, can be difficult to finance. Should more than 15% of the home owners be more than 30 days delinquent on their HOA dues, the condo project might not meet current eligibility requirements. Inadequate reserves is another hindrance that many neighborhoods may also face.
In the end, if your neighbors are not paying their dues, it may have a negative effect on you.