People Are Losing Their Homes Because of Disputes With Their Homeowners' Associations
What’s the latest reason people are losing their homes? It’s not just bankruptcies and late mortgage payments. It’s disputes with their Homeowners’ Associations. According to ABC News, over 80 million people in North America live in “self-governing” communities, run by boards that decide everything from the color of paint on houses, to trash pickups, to street parking, and collect fees to minimize crime, repair roads, and take care of pools, gardens and other public areas. Homeowners who break the rules – or don’t pay their fees – are fined and forced to bring their property into compliance. Fines can easily snowball to six figures, leading to foreclosures, violence, and homeowners jailed for small infractions.
For example, an ailing Florida grandfather couldn’t pay his mortgage and afford to re-sod his lawn. So, he let it die. He was thrown in jail until neighbors pitched in to replace his grass. A North Carolina man’s fines for unpaid dues and an illegal white picket fence reached nearly $25,000. A few days before he was scheduled to be evicted for the unpaid fines, he burned his house to the ground – while he was inside it.
So, how can you protect yourself? If you’re buying in a regulated community, read the deed restrictions and Homeowners Association requirements and penalties before you close escrow. If you already live there, re-read the paperwork so you know where you stand. Finally, don’t ignore any notices about late payments or violations, which can lead to a lien and even foreclosure. In fact, go out of your way communicate with your board – so you can work out a solution that works for everybody.
Moral of this story: Even if you can't pay the mortgage, if you want to do a short sale to save your credit...keep up to date on your HOA fees. Unpaid HOA fees can wreck or break a sale.