Wednesday, April 20, 2011

Do I have to pay my HOA asessments even though I am short selling or going through a foreclosure?

The short answer is yes.  Homeowners' Associations (HOAs) have the power to collect assessments through statute and the Declaration/CC&Rs applicable to the community you live in.  Typically, the Declaration/CC&Rs provide that the obligation to pay assessments is a personal obligation, and as such, any unpaid assessments can follow you, even after you leave the community.  The HOA can get a money judgment against you, even though you no longer own the home. 
In addition, the HOA's assessments are not tolled during your short sale negotiations.  The HOA has no obligation to cooperate or work with you, as the bank may be doing.  When you reach the point of closing (finally!) on that short sale, the HOA can, and likely will assert a claim for any unpaid assessments.  This can hold up your sale. 
Our advise is to ALWAYS pay your assessments.  Other than Uncle Sam (taxes), a HOA is perhaps the worst creditor out there.  Unlike a bank, if your home is foreclsed on, the HOA's deficiency judgment does not go away.  Our laws, as they currently exist, do provide some protections from banks, but none from HOAs. 

No comments:

Post a Comment