Homeowners who live in a housing development are usually members of a Homeowners’ Association, or an HOA. Being part of an HOA requires the homeowner to abide by certain rules regarding the care of the property and pay dues and fees to the HOA. In return, the homeowner receives communal benefits. In some situations, HOAs can levy fines against homeowners in addition to the monthly or annual fees that the homeowner owes. If the homeowner falls behind on the payments due to the HOA, the homeowner may be surprised to learn that the HOA is filing for foreclosure.
HOAs have the power to file liens when a homeowner has not paid the required dues or fines, and once this lien is filed, it opens the way for the HOA to file a foreclosure action. The exact circumstances under which an HOA can file a lien against a homeowner’s property and eventually proceed to foreclosure is outlined in the HOA’s founding documents or master deed. Generally, when an HOA files a lien against a homeowner’s property, the HOA sends notice to the homeowner in order to give the homeowner an opportunity to contest the lien or pay off any dues in order to avoid foreclosure.
An HOA foreclosure is similar to a foreclosure by a lender on a mortgage. The HOA can either proceed by judicial or non-judicial foreclosure. With judicial foreclosure, the HOA files the foreclosure action in court, and the case goes through all the stages of litigation before a court approves of the foreclosure sale. In a non-judicial sale, the HOA can proceed to a foreclosure sale after notifying the homeowner of the pending sale. This is usually done through publication in a newspaper. This allows the homeowner time to pay the amount owed or contest the pending sale.
If the homeowner has any defenses to foreclosure, he or she can present this information in order to avoid the foreclosure. This can include evidence to show that the fees or dues assessed to the homeowner, which led to the foreclosure, were not assessed properly. Under both foreclosure approaches, the homeowner still has some time after the sale to pay the amount due and any additional costs, including any applicable attorney’s fees, in order to get back the property. This is known as a redemption period. The redemption period may be shorter if the home is deemed abandoned.
The HOA can file for foreclosure even if the homeowner is current on his or her mortgage payments and is not at risk from foreclosure by the bank that holds the mortgage. Once the HOA foreclosure is completed, the homeowner will still owe on any mortgage the homeowner did prior to the foreclosure. The HOA does not extinguish the homeowner’s obligations to other creditors. Selling the home while it still secures a primary mortgage can be difficult, unless the HOA is also the purchaser of the home at the foreclosure sale.
Contact Us for More Information
Whether you are facing foreclosure because of missed mortgage payments or because of unpaid HOA dues, you should contact an experienced foreclosure attorney as soon as possible. For more information and to find out if you have a valid defense to foreclosure on your home, call us at Resnick Law, P.C. in Bloomfield Hills and Detroit, Michigan. Our experienced attorneys can guide you through possible defenses and different alternatives to avoid foreclosure.
(image courtesy of Breno Assis)