If you are currently an owner of a property such as a condominium, townhouse, or a single family residence that belongs to a homeowner’s association, you may face unique scenarios and challenges if you fall behind on your monthly HOA fees or special assessments imposed by the association.
These types of fees are typically reserved for maintaining the common areas within the association, maintaining the overall cleanliness of the community, or making necessary upgrades.
If a homeowner stops making payments, the HOA can place a lien against the property and move forward with the process of foreclosure.
What is an HOA?
An HOA (or Homeowner’s Association) is essentially a legal entity which is established strictly for the purpose of maintaining and providing management for the community. The members of the HOA are typically homeowners which reside in the community. The HOA serves two primary functions:
- Collect monthly fees towards maintenance and budget reserves
- Enforce the rules and regulations within the community as stated by the legal HOA documents
What Happens When You Stop Paying Your HOA Fee Dues?
Typically, HOA fees are taken into consideration when initially writing up your mortgage. Your monthly income and credit score are both evaluated to determine if the mortgage with other fees, such as an HOA fee, is manageable for you and your budget. Sometimes, life circumstances can make it difficult for you to pay your HOA fees. You may have lost your job or are now faced with extenuating circumstances that have impacted your finances.
Each HOA has unique rules and policies for the consequences of not paying fees. State laws will also vary across the country. The HOA guidelines in Massachusetts may differ from another state. In order to know the policies for your specific HOA, contact the board. If you are faced with financial difficulty and are worried about the cost of HOA fees, be sure to reach out before you miss a payment. The consequences for a missed payment can be severe and may even give the HOA the right to foreclose on your property.
How Long Does It Take For an HOA to Foreclose On Your Home?
In short, it takes 90 days for an HOA to file a suit enforcing payment for the missed fees and start the process of foreclosure. In order for this to occur, there are certain notices that must be legally given to the resident. The first is a notice after two months of missed payments, or 60 days. The mortgage lender and homeowner will both receive this warning. Upon receiving this notification, the mortgage lender will often pay off the debt and then require the borrower, or homeowner, to make payments to the mortgage lender instead.
The second notice must be given 30 days before the HOA files a suit in court. This demonstrates an intent to file suit towards the mortgage lender and homeowner. After this notice has been given, the HOA is then free to continue with court proceedings about the case. If the homeowner is deemed liable for the unpaid fees, the court could force the homeowner to sell the property to repay the cost. This would result in foreclosure.
Can I Stop My Homeowner’s Association from Foreclosure?
There is a misconception that if you pay your mortgage payments in full and on time, you are exempt from foreclosure due to missing HOA fees. That is not the case. However, there are several ways to prevent foreclosure from your homeowner’s association. These methods include the following:
- Notify your HOA as soon as you can
If you are suddenly faced with circumstances that may hinder you from making your HOA payments, notify the board as early as possible. They may be willing to work out an agreement that can help you stay on top of your payments.
- File for bankruptcy
This option is not recommended, but it could provide you with a temporary solution as you seek to get your finances in order. Once bankruptcy is filed, an “automatic stay” is put in order. The HOA can request that the court lift the stay. If this happens, you will once again be faced with the process of foreclosure.
- Sell your house for cash
One way to completely avoid the consequences of missing an HOA payment or experiencing foreclosure is to proactively sell your house. A sudden change in your financial situation may mean that you are having difficulty keeping up with your mortgage and HOA payments. A simple way to recover from this financial hardship is to sell your property to a professional home buyer. This will allow you to quickly and easily transition to a different residence that is more suitable to your circumstances.
If you are worried about an HOA foreclosure in Massachusetts, we are here to help. We have years of real estate experience and we want to make sure you have the advice you need to make the decision that is right for you. We buy homes in any condition and offer a FREE, no-obligation cash offer. For more information, contact us today!