Everyone who lives in an HOA knows about the monthly assessments required for maintaining the community’s quality of life. In fact, one crucial duty of the homeowners is to pay their monthly dues on time. If someone fails to do so, they are bound to face the consequences.
Foreclosure may seem like a long process. However, it is important to take action when homeowners do not pay their dues. If foreclosure sounds like a headache, Scottsdale HOA management companies can smooth out the process for you.
What is HOA foreclosure?
Every HOA is governed by a few sets of rules and regulations known as the CC&Rs and bylaws. CC&Rs describe the code of conduct for homeowners in an HOA. One of the essential duties of a homeowner is to pay monthly fees and assessments. These are payments made for the maintenance of various amenities of the HOA.
When homeowners buy a house in the community, they agree to all the governing rules, including paying monthly assessments. Upon failing to pay these dues, they may face the consequences. One of the most well-known of them is foreclosure.
Foreclosure refers to assuming possession of someone else’s property when they fail to repay their debts at the correct time. When homeowners fail to pay their monthly dues, the HOA board can file a Claim Of Lien for Assessments.
By filing a claim of lien, the HOA can snatch the homeowner’s rights from their property. This includes selling and refinancing the property. This is a popular HOA practice to force homeowners into paying their debts.
Can HOAs legally foreclose homeowners’ houses?
HOAs can legally foreclose on homeowners’ houses, provided that the state laws and their HOAs governing documents permit it. Arizona HOA law states that foreclosure is only allowed when the property owner’s debts exceed $1,200. If they fail to pay the monthly dues required to keep up with the community’s maintenance, the HOA board has the right to foreclose their house.
What happens after foreclosure?
If the homeowner succeeds in paying back the debts to the association, they can buy back their property. The owner must pay the entire debt, including fines and charges. If the HOA renovates or repairs the property during the foreclosure period, the owner has to repay these costs as well. In the case the owner fails to do so, the lender officially gets hold of their property.
Each state has different laws for homeowners associations. It can get confusing to understand them and meet the requirements. In judicial processes, the board may need to provide various evidence before they can foreclose. All these tasks can seem to put off the board members. Seek professional help from HOA management groups to lower the burden.