How To Stop HOA Foreclosure
People choose to live in different areas and neighborhoods for different reasons: schools, proximity to work, affordability of housing. Many may choose to move into a Homeowners or Condominium Owners Association community for a certain standard of living and property upkeep. But HOA and COA communities come with their potential risks. Much like if you fall behind on a mortgage, if you fall behind on HOA/COA dues, you can potentially lose the home you worked hard to get. Contact one of our foreclosure attorneys at Moshes Law to learn more about how to fight HOA foreclosure.
What’s An HOA And How Does It Work?
A homeowner’s association is a group of residents governed by a board of directors that oversee a community. They maintain a set of rules (Covenants, Conditions, & Restrictions or CC&Rs) that residents have to abide by to maintain an expected quality of living as well as upkeep of community common areas. Residents pay dues each month to fund common area upkeep and quality of life. As members, they also have input into CC&Rs and how the community is run.
Understanding HOA Liens
Like mortgages, there are consequences if you fall behind on paying your HOA dues each month. If you’re late on paying HOA dues, your HOA can file a lien against your property for unpaid fees. Depending on specifics in your HOA’s CC&Rs, you could be liable for things like:
- unpaid dues and accrued interest
- late fees and fines
- legal costs incurred by the HOA
The lien may automatically kick in at the time HOA fees are due, or the HOA may file public notice of the lien with your county recorder.
Consequences Of Not Paying Hoa Dues
If you fall behind on your HOA dues, you can face fines or even an HOA lien for the money owed to the HOA. An HOA dues lien can complicate the ability to sell your home. Worse yet, you can potentially lose your home to HOA foreclosure if the process goes forward far enough. In many cases, HOA liens are given priority over other liens that may be against a home.
How HOA Foreclosure Works
There are two types of foreclosure: judicial and non-judicial. Non-judicial foreclosures involve processes laid out in an HOA’s CC&Rs and local and state laws. New York is a judicial foreclosure state. That means an HOA has to take you to court in New York in order to foreclose on your home.
HOA Foreclosure Process
New York has two different sets of laws that govern HOAs and COAs. The New York Condominium Act (N.Y. Real Prop. Law §§ 339-d through 339kk) governs COAs. New York HOAs are often run as nonprofits. They’re subject to the New York Not-For-Profit Corporation Law (N.Y. Not-For-Profit Corp. Chapter 35). You can learn more about New York foreclosure laws here.
Hoa Foreclosure Timelines
The total time to process a foreclosure can vary from case to case, but generally, the following can be expected:
- The HOA will file a lawsuit to foreclose and file a summons and complaint.
- The homeowner has 20 days to respond if they were served in person; 30 days if served by mail or other means.
- A foreclosure settlement conference will be scheduled within 60 days of the lawsuit filing.
If a way can’t be found to avoid foreclosure, the HOA can get a default judgment if you don’t respond to the complaint. If you do answer, the foreclosure will be processed in the courts. Ultimately, the house can be foreclosed on and a sale date set for the property.
Required Notice For An HOA Lien
HOA and COAs are mandated to file lien and foreclosure notices with the county recorder. And such a notice must contain the following:
- Property and owner name/address
- The book & page number of a recorded property
- Description of the unit
- Amount and reason for unpaid common charges
- Date the common charges were due
The lien must also include a statement that the lien will remain in effect until all available balances are paid off.
Notice of Intent
The notice of intent being filed must contain the criteria mentioned above (name, address, filing information, etc.). Any HOA board member may file a lien notice if no lien was filed within 60 days of the unpaid charges coming due.
How To Stop Foreclosure from HOA fees
There are several ways you can stop HOA foreclosure. The most common ones are:
- Paying off and bringing current past due HOA fees
- File for bankruptcy (Chapter 13)
The best option though is to consult a qualified foreclosure lawyer. Our foreclosure attorneys at the Law Offices of Yuriy Moshes are standing by to assist you with your case. Fill out our online form for a free consultation.
Will Chapter 13 Bankruptcy Stop An Hoa Foreclosure
Can bankruptcy stop the HOA foreclosure? Chapter 13 bankruptcy is one potential option to stop an HOA from foreclosing on your home. Under Chapter 13, a bankruptcy judge will institute an automatic stay, and a repayment plan is devised and implemented for you to pay a designated Chapter 13 trustee. This keeps the HOA from foreclosing on your home as long as you make on-time payments. In conjunction with the automatic stay, a homeowner may also pursue mortgage modification.
How To Deal With Hoa Dues When Filing Chapter 7
If you don’t intend to keep your home but want to eliminate some or all of the HOA lien debt, Chapter 7 bankruptcy may be your answer. Chapter 7 will get rid of your liability for HOA dues owed up to the time you file for bankruptcy. The HOA can also still pursue foreclosure in court. And it doesn’t negate what HOA fees may accrue after you file, for the time the home is still in your name, until the foreclosure is resolved.
Risks Of Filing Bankruptcy
While bankruptcy can give you a fresh start in some ways, there are risks to filing. Bankruptcies stay on your credit record for seven years. They adversely affect your credit, impacting your ability to qualify for loans or other forms of credit. That’s why it’s important to explore potential alternatives with a foreclosure attorney as well as doing your due diligence in making sure all steps are properly followed.
Inquire About A Payment Plan:
Ask your HOA if they would accept a repayment plan of the past due amount. Ask if it can be added to the regular amount you pay for HOA dues.
Make Sure Your HOA Followed Proper Procedure:
There are many steps required when pursuing a judicial foreclosure in New York. That’s why it’s a good idea to work with a qualified attorney who knows what to look for and what potential corners an HOA may cut during HOA lien and foreclosure procedures.
Keep In Contact With Your HOA:
Avoiding HOA issues won’t make them go away. If you show good faith effort and are up front in your dealings, the HOA may be more likely to work with you on a mutually-beneficial solution.
How To Reduce HOA Dues
You may have several options open to you for reducing or eliminating HOA debt before your HOA starts to foreclose on your home. These are a few of the more common potential solutions:
- Pay off your past-due HOA dues in their entirety.
- Negotiate a reduced amount settlement with your HOA.
- Discuss a payment plan if you can’t pay off the past-due amount in its entirety or get the HOA to agree to a reduced amount.
Ways To Deal With Hoa Foreclosure Threats
Bankruptcy, repayment plans and reduced amount proposals are potential solutions. You can also have your attorney look into the HOA lien and foreclosure processes. If your attorney finds any corners were cut or seem illegal or improper actions were taken, you have potential grounds for counteractions against your HOA.
Consult With The Bankruptcy Attorney
HOA liens and foreclosure proceedings are long, involved processes where it’s best for you to have experienced legal help on your side. They best know how to stop a foreclosure from an HOA lawsuit. Contact the Law Offices of Yuriy Moshes for a free consultation to discuss your case with one of our qualified foreclosure attorneys today.
Your Homeowners Association can file a lien against your home, or initiate foreclosure proceedings in court, for past due HOA assessments.
If you move to a home or condominium community governed by a HOA, you automatically agree to abide by the HOA’s CC&Rs. Do your due diligence and ask questions about the HOA ahead of moving into an HOA community. Ask to read the HOA’s CC&Rs.
HOA fees are charged in condominiums and some housing developments. They pay for the cost of maintaining common areas, repairs, and upkeep of public places like pools and clubhouses.
In New York, the average person will pay up to $500/month in HOA dues. Depending on the amenities or qualities of the desired community, dues can climb into the thousands per month.