I came across this story about a soldier whose house was sold by his Home Owners Association whilst on active duty. This story makes absolutely no sense to me, mainly because the idea of a HOA is nearly unheard of in the UK. Namely:
How does a HOA have any power to sell somebody else’s house? Is the association the actual owner?
How can you lose a $300,000 house off an $800 debt?
How can a house worth $300,000 be sold for $3,500? Where has the $2,700 gone, for a start? Is this a case of fraud: some deal between the purchaser and somebody in the HOA? It beggars belief that, even at auction, houses are routinely being sold for a tenth of their appraised value.
The home is not owned by the HOA, but the HOA agreement allows them to place a lien on the home if an owner does not pay the HOA fees. In some cases, a lienholder can force the sale of the underlying property to recover the debt.
As for the sale in this particular case, it was almost certainly illegal, and the cheap sale price reeks of fraud. I have a feeling some clever HOA board member thought this would be a great opportunity to acquire a neighboring property for cheap; by forcing a lien sale and then conveniently forgetting to find a reasonable bid for the property.
I remember a shitload of stories about this kind of thing here in the Las Vegas valley a couple few years ago. I know there was a great hue and cry for them to change the laws about this sort of thing, but I’m not sure if our state legislature has gotten around to it yet.
“In Texas, homeowners’ associations can foreclose on homes without a court order, no matter the size of the debt.”
I do not even understand how this is possible. In my state all foreclosures are through the courts. My experience it is very very hard for HOA’s to collected back dues. If I remember rightly here you can only get 3 months of what you are owed or some such. My HOA dues cover water/heat/ect so its a big problem.
Our HOA did that recently. This condo owner hadn’t paid their HOA dues in like 3 years. I see no problem enforcing a contract. (though it sounds like the case in our association was a lot more egregious than the one in the OP)
There’s the Servicemembers’ Civil Relief Act which dates back to the Civil War that prevents members of military from being sued while on active-duty. Suspending things like foreclosures or evictions have been part of it’s raison d’être from the start. Even though it’s a federal law it still applies to actions in state courts under state law.
The HOA appears to have committed fraud in several aspects of the case. I’m a unit owner in an HOA and one of the owners did not and could not pay the assessments (so she claimed). I was on the Board at the time, and we agreed to an arrangement where she could make some payments each month, just a fraction of the assessment fee. She defaulted on that, too, so we foreclosed. Unfortunately, there is a mortgage of $85,000 still owing, which is a prior lien. At the foreclosure sale, nobody bid, not even the mortgagee, so the HOA got title for the amount of assessments owing. However, the mortgage had a non-assumption clause, so the Association could not just pay off the mortgage. We either had to cut our losses, bite the bullet, and take the $17,000 loss (assessments and attorney’s fees), or pay off the entire mortgage debt, hoping to sell the property for at least about $125,000 just to break even. We bit the bullet rather than gamble. Units have been selling around $100,000 now.
So don’t blame HOA. Most of them are honest and forthright, more so than many of the owners. We would’ve been better off not foreclosing and let the mortgagee foreclose. At least we would’ve saved attorney’s fees. The attorney, incidentally, was negligent in not reading the terms of the mortgage and missing the non-assumption clause. Well, I’m not on the Board any more so I can’t recommend suing the attorney.
Can somebody go back one step further and explain what an HOA is and what it does for the fees it gets? As another confused Brit I’m trying to equate this to anything in the UK and not getting too far!
Essentially, it’s like a privatized version of the village government. The people who buy houses within the area agree to support the local HOA. In exchange, the HOA will provide services to the residents like plowing streets, collecting garbage, maintaining roads, etc.
And the franchise is restricted to property owners only. Those with multiple/larger units/lots get more votes. The developer also usually get’s multiple votes for every lot/unit it owns (even though the buyer would only get one vote) so that they can retain overall contol of the development until a supermajority of lots have been sold.
Also they aren’t subject to the same constitutional restrictions (say on freedom of speech) that a proper local government would be.
It’s also worth mentioning for confused non-Americans that they aren’t the standard way of doing things even in the US. There are plenty of plain old neighborhoods without them. Most of the people I know who have one it’s because they’re living in a condo.
They also tell you what you may or may not have in your yard, what colour you can paint your house, to keep your garage door closed at all times, how high your grass can be, what plants you can have in your yard, what you may have in non-visible parts of your property, and levy fines for infractions of Teh Rulz.
Actually, while the media loves to regularly report outrageous stories of ridiculously over-the-top HOA regulations every other day, most of them are not anywhere near that anal.
Is membership in a HOA compulsory, and if so how is that enforced? Obviously if a homeowner signs the HOA agreement they must follow the rules, but why must they sign it in the first place?
HOAs are usually created by developers who buy a large plot of land and subdivide it into multiple housing units, or who build condo buildings. When the developer divides the original plot (or building) up into multiple properties, the provisions of the HOA are added to the deeds. Whoever then buys the property has to agree to the HOA provisions in the deed in order to buy it.
HOA’s have been occasionally dissolved by angry owners. In that case the development may continue without one, or a new one may be formed with different rules.
Or that your construction van cannot be parked overnight in your own driveway. My friend does custom floors and removes the magnetic sign from the doors of his work van every night so his HOA doesn’t send him a warning. His house is in a regular American suburban neighborhood, not a condominium.
My wife and I are currently shopping for a house, and we will not look at homes that are part of a HOA. First, I don’t want to pay the HOA monthly fee that must rise over time, secondly, I will not spend this much on a home only to have the HOA tell me I cannot work on my car in my driveway.
I’ve lived in three – all have been at least that anal. Like all small groups given a lot of power without a lot of restriction, they always seem to attract the “rules lawyer” types, and generally become an outlet for letting the HOA committee members enforce petty grudges against people they don’t want living near them (surprisingly often, folks in different ethnic or social classes). Two of the three I’ve lived in were engaged in litigation with their homeowners over dumb stuff: a small sunroom that was a few inches larger than the (unspecified) “community norms” in one case, and in another, the color of the indoor carpet in an upstairs child’s room.
Given the choice, I’d never live in one, but nearly all properties in my area are covered by them. I would also never, under any circumstances, allow an HOA committee member in my home without a court order.
