When a homeowner becomes a part of a homeowner association they typically understand the necessity for paying annual HOA dues. However, there are a number of reasons that a homeowner may not pay the dues. Annual HOA dues are an important part of the functioning of an HOA as these funds are used to help cover maintenance costs for the overall property. If you are a part of an HOA board there are a few steps you can take to address the delinquent owner.
Do Your Homework
Before taking any action against the delinquent dues payer, check your bylaws or other governing documents to make sure that it is within your rights. You may need to amend your bylaws before taking any other steps. If your HOA does have an attorney, it is a good idea to consult with them.
Late Fees, Interest and Other Restrictions
Late fees and interest are great incentives to paying a bill on time. If you do have an owner who owes dues, consider adding these fees. You can also consider restricting amenities, like use of the common areas, gym or pool. This can be an especially effective tactic if the owner has renters in the unit.
It is necessary to notify the homeowner before any legal action is taken. Oftentimes a timely and firm notice will produce the desired results and can save you a lot of hassle down the road. Make sure that your notice contains the following information:
- The total amount that is due
- How late the payment is
- How much interest and late fees have been charged
- Warning of future collections efforts
Some associations will offer payment plans, as some states require this step. A payment plan does allow the homeowner to get caught up over time with the money going directly to you. Make sure you check your bylaws and local HOA laws to see if you are required to do so.
Get a Lien
If a homeowner still does not pay annual HOA dues even after proper notification, further action may be needed. The next step would be for the HOA to place a lien on the property. A lien is a note in the public records that states that you are owed a specific amount of money. If the delinquent homeowner tries to sell the home, you are then paid out of the value of the sale.
File a Lawsuit
If further action is needed, you can file a lawsuit, suing a delinquent property owner for past-due assessments, fees and interest. How and when a lawsuit is filed depends on state law. However, if the lawsuit is ruled in your favor you can get the money owed to you from the person’s income, bank accounts and tax returns.
Please remember, we are not legal experts. Each homeowners association is governed by its own set of state laws and bylaws so make sure and check into these before taking any action.
Sources: Equity Experts