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Evil HOA Liens and Fees and How It Will Affect the Sale of My House
If you go into default on your HOA, your HOA, or Home Owner’s Association, will put HOA liens and fees on your property for the unpaid amount, also referred to as arrears. And then your monthly assessment is going to have a late fee put on it every month. Even if you are paying your current due balance? Yes! If you’re paying the monthly payment, but you have a past balance still due, you will still get a late fee every month!
What do these late fees usually amount to? It depends on the HOA, but usually its $10, sometimes its $20, sometimes its $25 or more! It really just depends on the HOA that you have and how they charge their late fees. Some HOAs are quite extensive; you may enjoy amenities such as golf course access, but once you have unpaid charges from your HOA your amenities may be suspended. So, if not you’re paying on an HOA that you receive amenities, or benefits, i.e. a club house, gym, pool, golf course tee times, etc., your membership could be suspended and you won’t be able to enjoy those HOA benefits.
So here’s the end result when you don’t pay HOA fees or penalties; it will become a lien on the property and the fees and/or fines will continue to grow until the lien is cured. The property cannot be transferred, or sold until the collection is settled. There are several ways to cure an HOA lien. If you’re dealing with the course of a short sale, sometimes the bank, or short sale lender, will contribute to it, sometimes buyers will contribute to it, and sometimes the seller will help to cure the lien. All of these scenarios can happen to cure the lien at the close of escrow.
HOA Liens and Fees
The first thing that you always want to do is, depending on how bad, or how much, the HOA liens and fees are, is to see if the HOA (Home Owner’s Association) will negotiate with you at all. If there’s fines involved or violations, a lot of times the HOA will waive some or all of these in efforts of getting the property sold and getting a new homeowner in the home or property. If there are back due assessments often times an HOA will not negotiate the amount due. So if you get a fine because you have a broken fence and the fine is $1,000 sometimes an HOA will say “O.K., we’ll waive that $1,000, but you’d better have that buyer fix it within thirty days of taking possession of the house. If the new buyers do not, the HOA can and probably will come after them.
As far as curing arrears, liens and fines on standard sales, the amount due comes out of the proceeds of the sale, or the seller’s pocket if you will. But also during a standard sale, the HOA can also be paid off with the help of a buyer, as long as the buyer is willing to pay the HOA liens and fees as a cash contribution. HOA liens and fees cannot be financed with a buyer’s loan.
Depending how bad an HOA lien is determines how and what will happen. Normally from three to six months an HOA will rack up fees, penalties and fines. Then the HOA may transfer the unpaid account to an attorney for collections. Once it goes to an attorney for collections, look out! Because now you’ve got attorney fees and pay-off demands, all through the attorney’s office. And it all has to be taken care of before that HOA account, and subsequently the property, can be transferred. Attorney’s fees usually run from $500 to $2,500! That’s a boatload of money! And once the collection goes to an attorney there’s nothing you can do. You have to pay the full amount and there will be no negotiations. We’ve never seen an attorney negotiate their own fees. That isn’t set in stone, but every situation we’ve ever come across that has been the case, and we’ve dealt with many HOA liens and issues.
HOA Liens and Fees – What to Look Out For
The one thing you must look out for is the lien recorded amount compared to the payoff amount. The recorded amount that’s on title is normally far behind what the actual lien amount is; the recorded amount does not keep updated with the ever-changing balance due. So say you’ve got an HOA lien recorded amount of $1,000 but it was recorded a year ago. It could require a $2,000 payoff now, and maybe more especially if the collection has been assigned to an attorney.
Trust us when we say that HOAs have found a way to ensure that one way or the other they are going to get their money. Whether it be now or two years from now they will get paid. Your best bet is to never fall behind with your HOA dues, fees and penalties. And if you do, cure and pay off the balance A.S.A.P.! Yes, often times you get nothing from your HOA, or Home Owner’s Association, except for a list of “Do Nots”, but you will still pay if you bought into a community with an HOA.
Keep in mind, we are not against HOAs. They do provide many services to a community, like pools and community centers and gyms and even beautiful golf courses. They can even protect you from your neighbor deciding his house’s exterior now needs to be painted florescent lime-green! But they can also be non-existent as far as amenities are concerned and even fine you every time you leave your trash cans on the curb longer than 12 hours. It just depends on the HOA.
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