HOAs initiating Foreclosures without going through Court
HOAs have come under fire for having the authority to initiate foreclosure for unpaid association dues without having to go to court. But many advocates arguing for the HOAs contend that a good number of associations have collapsed not being able to function because of delinquent unit owners.
Seth Weissman of Weissman Nowack Curry & Wilco of Atlanta that specializes on matters relating to HOAs said, “I’ve practiced law for 31 years and, by far, this is the worst downturn I’ve seen and the first downturn where the number of homeowners not paying their dues is staggering”.
If the association buckles under then the value of its units are cleaned out – worsening the condition of housing market that is already fragile. The banks refuse to advance loans if the association is straddled with unpaid dues that over 25% of the fees that are kept as security on the loans.
Some associations however are battling the downturn. Many are writing off the bad debts rather than spending more money on the bad dues. Weissman said that now they have become more selective and eyeing the salaries and bank accounts of the house owners although admittedly this is “an awful big stick” to wield; but this is done when there are no other options.
Carol McDaniel the head of an association in Magnolia Lane in Cobb County. It is surrounded by green – quiet and peaceful with a group of condos. She explained, “When you’re in a community like this, you’re trying to keep up the value of the neighbourhood”. When queried about the financial troubles of her neighbours she said that monetary troubles have not spared anyone currently because of the economy. The situation is tough for all.
Her association has hauled nearly six of the owners to court to realize past dues including her neighbour Helen Burgess. The water supply of Burgess had been cut off and she has to haul it from afar. Common amenities have also been refused to her. She purchases water for drinking and cooking purposes.
The situation is ironical for Burgess. She has spent two decades dealing with real estate but cancer interrupted her work. Just when she was recovering the economy tanked forcing her to struggle with irregular underpaid jobs. The gloom in the housing market did not allow her to sell her condo.
The situation has made it awkward for Burgess and her neighbour McDaniel who is the head of the home owner’s association.
