What Happens When Homeowners Have Unpaid HOA Dues?

    Homeowners associations, or HOAs, are helpful to homeowners in many neighborhoods, but they require dues to take part in the many benefits they offer. These associations are responsible for managing common areas and enforcing community rules and regulations. The boards of these associations are usually made up of volunteers from the neighborhood or development. HOAs ensure their communities are kept clean and pleasant for current homeowners and future homeowners.

    Being a part of an HOA can be worth the dues that homeowners must pay. However, having unpaid dues can affect a homeowner’s credit score and even cause them to lose their home. It is important to understand HOA dues, what an HOA will do to recover unpaid dues, and what happens after unpaid HOA dues cannot be collected.

    What are HOA dues?

    To cover the cost of improving, maintaining, and repairing common areas, as well as paying taxes, the HOA collects dues from homeowners every month. These payments are not part of the mortgage, tax, or insurance payments that each homeowner owes. However, paying dues is still a legal obligation that every property owner covered by the association must pay. If a property owner does not pay their monthly obligation, the HOA can take action to recover the unpaid dues.

    What will the HOA do to recover unpaid dues?

    Typically, the HOA will first make contact for an outstanding payment by sending letters to homeowners. The HOA may eventually conatct a collection agency to collect unpaid dues. The collector may make calls to homeowners as well as send certified letters to recover the unpaid dues.

    If the collection activity fails to get the dues paid, the HOA can then place a lien against the property. The HOA has the right place a lien on the home according to the agreement that all homeowners sign when they enter their community. The HOA will file lien paperwork at the county clerk’s office to begin the process against the homeowner. The HOA lien will stay in place until the debt is paid.

    If a property owner fails to pay the HOA dues, even after the lien is filed, the homeowners association can take the next step of foreclosure. This step is taken in order to force the sale of the property so that the association can recover the unpaid dues.

    What happens after unpaid HOA dues cannot be collected?

    When homeowners fail to pay their HOA dues, it will affect their credit score immediately, especially if they are reported to a credit bureau. There are three main credit reporting bureaus in the U.S. These agencies collect credit information on individuals and use this information to generate credit scores.

    Any unpaid HOA dues or liens on a property can affect a personal credit score. Debt payments make up about 35 percent of the factors that the credit agencies use to calculate a credit score. Late payments or liens can rapidly affect this part of the credit scoring process, bringing the score down significantly in a short amount of time. If the HOA has to foreclose on the property, it will lower the homeowner’s credit score even more and possibly cause them to lose their home.

    It is important for homebuyers and homeowners to understand why HOA dues should be paid and what happens if they are not. If you would like more information about HOAs or real estate, call the Amarillo real estate specialists at Elite Real Estate Group at (806) 337-0883. You can also Contact Us by email to learn more about what our real estate specialists can do for you and view our listings.

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