Not Paying Your HOA Fees Is The #1 Killer of Short Sales and Deed In Lieu

Sellers not paying HOA dues is killing the condo projects in the Sacramento region.  Many are rising above the 15% delinqency rate, making it harder for buyers to obtain loan financing, especially FHA and Conventional loans.

Thanks for sharing this blog post and best of luck to you in 2012!

Katerina -- Many homeowners in trouble and trying to stay afloat will let their HOA payments go thinking they are not as important as trying to pay the mortgage. The HOA will foreclose (I just picked up a client in that situation) and you're right....delinquent HOA fees will sink a short sale. I will reblog this as well. VERY important info. Thanks.

It is important that HOA understand that to collect in full from the lender that they must first send a demand to the unit owner's lender for back owned condo fees. I believe this has to do with the concept of a HOA Super Lien. HOA's should be a little more aggressive with collections including foreclosing.

More and more we see banks not willing to pay for back HOA dues nor buyer's closing costs and it's killing deals left and right. So please at least have your clients pay their dues to give your deal a better chance of closing.

Ron is absolutely right, back HOA payments are a deal breaker in any situation.  Best to stay on top of those fees and remind buyers of this information when they are shopping.  They may wish to opt for a neighborhood that has no HOA. 

Nestor and Katerina

I actually blogged about forced place insurance at least a couple of times. May have to bring it up again. I had a client who elected to vacate her place and asked what she can discontinue. Told her to keep the utilities on (easier to show when we can turn on the lights, and the fridge won't get moldy) and absolutely keep her insurance on. 

This is very true.  I had a client a year and half ago and we had his condo listed   He didn't pay his HOA and the property got foreclosed by the HOA.  Nothing could be done about it.

That conversation with a seller includes paying other items like the front foot fee and ground rent. There is no point in complicating matters even more.

Thanks for posting.  I'm going to have to look into that here in NJ.  I haven't been a part of any deals where an owner was behind on HOA dues or in foreclosure on their unit.  Now I am aware - I will investigate it what the rules are here.  Thanks!

Good information.  People are mis-informed about the power of the condo association to be able to foreclose on a homeowner.

Katerina...

Yes indeed ... we have seen the HOA fees nearly kill several deals ... but we got them closed because the buyer agreed to pay them. However, they were less than enthusiastic about it!

I can totally see the HOA dues getting neglected also and how that could have a very sudden impact on the sale.  You figure that is probably one of the smallest bills the owner has to maintain the property. 

This is fantastic information, i have seen it in person where my buyers lost out due to the seller not being educated on what they should or should not be doing. I have seen the HOA place very large cement barriers blocking off  the driveway to a unit who had not paid in over a year. The HOA can foreclose very fast as well as add some hefty legal fees to what is owed also killing the short sale unless the buyer wants to pay even more. It is very important to educate the seller when you take a short sale listing

good stuff, had it happen to me on my 3rd short sale

Coach "K" this is the main reason why my short sale is not going anyway. We even got an offer on my short sale and we were only off $4,751 with a Conventional loan. And the bank still wouldn't approve the deal. BEYOND FRUSTRATING. And I feel very bad for my client who is super great as far as giving me what I need whenever I ask her and be patient as well. Have to re-blog this one. Thanks for sharing.