Homeowners Associations

• Homeowners Associations establish rules by which residents in the HOA must abide. HOAs can assess penalty fees if people do not maintain their yards, paint their houses certain colors or violate other neighborhood-specific rules. HOA members also pay annual dues that cover the cost of maintaining communal grounds and, in some cases, access roads. Condominium owners pay for property insurance with HOA fees as well as the property taxes levied on communal areas, such as lawns and shared swimming pools.
  
  

Consequences of Not Paying Dues

• HOAs are not-for-profit organizations; and as such, they must raise sufficient funds to cover operating costs rather than generate profits. However, many HOAs do keep cash on hand to pay for upcoming expenses, such as sidewalk repairs or roof repairs at condominium complexes. When HOA members fail to pay their dues, the association lacks the necessary funds to fulfill its obligations. When there are many vacant homes, HOA members have to pay increased fees to cover the fees that are normally paid if all the homes are occupied. To deter people from reneging on payments, some HOAs are quick to foreclose when homeowners do not pay their dues.
  
  

Nonjudicial Foreclosures

• When creditors foreclose on a home, the lender must take the borrower to court and a judge rules on the validity of the foreclosure case. In many states, HOAs are able to conduct nonjudicial foreclosures. An attorney can file a motion to change the ownership of a home without presenting a case before a judge. Homes are then sold and proceeds from the sale are given to the HOA. In Texas, this process can occur within 27 days of a homeowner missing an HOA payment.
  
  

Homeowner Protections

• Homeowners should carefully review HOA rules and regulations before deciding to buy a property. Additionally, people should familiarize themselves with state laws pertaining to the ability of HOAs to impose fees and foreclose. Some homeowners regularly pay their dues but fall into trouble because their HOA has the power to assess numerous fees for minor infractions of HOA rules. The federal government protects the interest of military personnel involved in HOA disputes to some extent, but savvy homebuyers should consult attorneys to learn about homeowners rights.