However, more often than not, the HOA will simply allow the mortgage lender to foreclose on the property and then sell it to a new homeowner. While an HOA foreclosure can certainly be intimidating, as a homeowner, you are not totally powerless.
You do have the option to fight the HOA foreclosure based on the following defenses:. If you fail to pay this charge and the HOA forecloses on your property as a result, both the lien and the foreclosure are nullified. The assessment lien the HOA placed on your home may also be voided because of inaccurate accounting. If the HOA or the management company fails to calculate the assessments correctly, you can claim it as a defense.
When this happens, the HOA or the management company will need to demonstrate their tabulations. Some states have laws governing how an HOA can go about foreclosures. If the HOA fails to comply with these laws, then you can use this claim to fight the foreclosure on your property. For instance, in California, the Civil Code Section The HOA may also begin foreclosure proceedings if the delinquency is at least 12 months old. While not all states require the HOA to record the lien, some states, like Arizona, do.
In fact, an HOA may even get in trouble for the failure of recordation. If your HOA neglects to record the lien or records it incorrectly, you can raise a wrongful lien claim against your association and fight your HOA foreclosure. Foreclosure proceedings typically take about 60 days to process. First, if falling behind on your assessments, property owners should talk to the HOA executive board about payment options. The HOA is comprised of neighbors, and they may be willing to work with property owners in creating a repayment plan or removing some late fees through negotiation.
Additionally, if the day window is not long enough to come up with the funds, property owners should try to repay the debt before the foreclosure process begins. If possible, property owners should pay off the assessments before attorneys get involved.
If this is the case, a property owner may have the ability to contest the foreclosure if the HOA failed to comply with the procedural requirements outlined above. Specifically, the manner in which the HOA went about calculating the assessments, notifying the property owner of the debt, filing the claim of lien, or initiating the foreclosure could all provide grounds for contesting the foreclosure.
If the HOA is attempting to collect assessments that do not meet this threshold, a property owner can petition the court to stop the foreclosure process. Property owners may also be able to contest a foreclosure if the HOA has violated its Declaration of Covenants, Conditions, and Restrictions , Articles of Incorporation , or By-laws in the foreclosure process.
If there are specific limits on the HOAs power to foreclose , it will likely prohibit HOAs from foreclosing on properties in order to collect past due assessments or limit when the HOA can initiate foreclosure. If the HOA still tries to foreclose in direct contrast to the Declaration , Articles of Incorporation , or By-laws , the foreclosure may be stopped. If there are no legal defenses to the foreclosure itself, property owners could bring a claim against the HOA for any bad conduct associated with the foreclosure.
North Carolina courts explicitly held that HOAs are considered debt collectors and past due assessments are considered debts for the purposes of the statute. Being covered under the statute means HOAs in North Carolina cannot collect past due assessments in a threatening, deceptive, harassing, coercive, or unconscionable manner. The prohibited conduct under the unfair debt collection statute can be manifested in many ways, but the statute does articulate some conduct as expressly illegal.
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