HOAleader.com - Tip of the Week - March 20, 2020
Published: Fri, 03/20/20
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This May Be Why Condos/HOAs Get a Bad Rap
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In this week's tip, we discuss whether an HOA could have made better choices.
The case involves a Colorado homeowner who apparently made a dumb decision, if the reports are true. The owner allegedly refused to pay $110 in dues to protest a $100 fee imposed by his HOA for a garbage can violation. The HOA filed a lien, then foreclosed on the owner's home, according to MSN Money.
Now, the homeowner has filed for bankruptcy, and the foreclosure has been halted while the homeowner appeals the foreclosure, alleging he didn't get proper notice, according to the MSN Money report.
All of this legal maneuvering is increasing the HOA's legal fees. Good way to collect $110, right?
Under Colorado law, an HOA can't foreclose on an owner's home unless the debt owed to the association is equal to six months of assessments, according to Elina Gilbert, a shareholder at Altitude Community Law in Lakewood, Colo., who has specialized in community association law for 19 years.
"I don't know how the association could foreclose on a $100 fine because the amount has to equal at least six months of assessments," she states. "However, there are late fees, there's interest, and there can be attorney fees if they turned this debt over to collections. As long as the amount, including late fees and interest, is over the amount of six months of assessments, this is proper."
Could the HOA have simply filed a lien for the unpaid assessment and then done nothing, expecting to collect the amount when the owner eventually sells? "Recording the lien helps only if the owner sells in six years because of the statute of limitations in that situation," explains Gilbert. "If the association sits and waits, it may not get its money.
"And what if it's multiple homeowners who are in arrears, and the remaining owners in the community are picking up the slack?" she asks. "There are all sorts of things to consider in this situation, and it's the board's duty to make sure all owners are paying their assessments. You have to be human, but you also have to make sure the association is properly funded."
Fair point. But what if there aren't many delinquent homeowners and this debt is, let's say, $500? What would Gilbert advise her clients to do to protect their position while being human, in her words?
"I'd advise the board to do a collection action first," she says. "We treat foreclosure as an extraordinary remedy. It should be a last resort unless you're talking about something like a $10,000 debt."
Florida also limits the scenarios in which this action can take place, and the process of collecting can get complicated. Find out more, plus the alternative options this HOA in the news could have taken—in our new article: https://www.hoaleader.com/members/4081.cfm
Best regards,
Matt Humphrey
President
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