Homeowner Associations have been another victim of the foreclosure crisis. With so many homes in foreclosure, the delinquency rate has to be very high. Vacancy rates contribute to the lack of dues revenue and banks may not be timely in their payments on foreclosed properties. In addition, can HOAs still provide the services that they are supposed to with a dramatic drop in dues collections? Homeowners that have remained in their homes are complaining that Homeowner Associations are not keeping up with their duties, and they are even considering withholding dues as a result. Some HOAs are managed by third party companies and recently a couple developments in our area have fired them and found new alternatives, maybe to reduce administrative costs, or maybe due to careless handling of monies. This is important information for a buyer to know about the development they are about to move into. This may be one of those things that you want to give them the name of the HOA President/Administrator and have them ask for themselves. Another case for being the source of the source, and not the source of such information.
When working with short sales especially, make sure to talk with the seller about their HOA dues. Ask if they are current and if not, advise them that most lenders will not pay delinquent HOA dues in their short sale transactions unless they are a lien on the property. This could place an unnecessary burden on everyone at the final stages of a short sale process. The seller is often gone and refuses to pay anything out of pocket, so often it is up to the buyer, or as a last resort, the agent. Try up front to get them to catch them up as part of the preparation process of a short sale transaction, it is much easier to work with this at the beginning of the process than at the end.
If you are the buyers agent, ask the sellers agent to find out from their seller if the Homeowner Association dues are in arrears. A lot of agents do not even think to ask about this, and you can bet if they miss it and have to ante up, you may be asked to split the cost to make the deal work, or worse yet your buyer may have to pay if they really want the home.
In our area we also have Fire and Ambulance Fees as we have volunteer fire departments. It is important to know if they are in arrears, and if they are required to be paid current by the seller, or can the delinquent fees be passed on to the new owner. It may vary from area to area. Again, check it out.
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