Orlando-area homeowners associations want buyers to pay back dues on foreclosed homes

[The Straight Story]

Orlando-area homeowners associations want buyers to pay back dues on foreclosed homes

Homeowners associations have been struggling to make up for thousands in dues lost when homes sit empty for months, waiting for foreclosure.

Two Orange County golf-course communities have decided to make their new residents foot that bill.

Buyers in Stoneybrook West in Winter Garden and Stoneybrook East in east Orange County have to add $4,000 to closing costs, mostly for dues that went unpaid by previous owners while the houses were in foreclosure for more than a year.

The so-called "resale capital contribution" doesn't sit well with real-estate agents and bankers, some residents and a group that advocates for homeowners' rights against HOAs. Usually, buyers in those communities would pay $1,000 to move in, but the fees were increased as the housing crisis deepened.

"It's ridiculous, and we are trying to get it changed," said Kristy Matthews, a Realtor and a homeowner at Stoneybrook West who has taken her complaints to the association's board. "It scares away prospective buyers, and it lowers property values.... When some people are buying their first home, it's especially difficult for them to come up with that kind of money."

http://www.orlandosentinel.com/news/local/orange/os-stoneybrook-west-east-hoa-fees-20100423,0,3146852.story

[liberal N proud]

1. Do they want the homes to sit empty?

Damned if I would pay dues for something I didn't belong to.

I think homeowner dues are bullshit in many instances anyway. If they don't have a clubhouse, pool and other amenities they are bullshit. There are developments on either side of us which pay homeowner association fees for nothing but to have the common areas (not a park) mowed once a week.

[DURHAM D]

2. The outcome of this will depend on the Governing Documents

and the general statutes of Florida. Generally the monthly assessments are specific to the "property" - not the owner. In other words its like property taxes and the assessments remain.

[WeDidIt]

8. Nail. Hammer. Head

HOAs exist for one purpose and one purpose only, to provide services on common properties that incorporated cities, towns, and villages don't or won't provide.

For example, in my association, we own the retention pond, common green areas, and alleys. It is up to us to keep those areas maintained. Every home in the association owes an equal share towards that maintenance.

[liberalhistorian]

13. While that may be technically and legally true,

this HOA is not thinking logically and can't see the forest for the trees. They may have the right to tack on the back dues, but good luck, then, getting buyers to be interested. Especially in such a bad, sluggish market as this when they need all the interest and incentives they can get. That's like a business that raises its prices when faced with declining revenues because people can't afford its services.

[WeDidIt]

18. Our HOA does it

Has affected sales at all.

Foreclosure auctions are bargain hunters' dreams. An extra $4K is nothing compared to how cheaply they pick up the property.

[county worker]

34. You are not subject to CC&Rs until you own the property.

You were not an owner when the dues went unpaid so I fail to see how you could be made to retroactively pay someone else's dues.

[Trillo]

39. Municipal water services do it in our area.

If the vacant home had any water charges accrue during the vacant period (such as a broken pipe), the new owner must pay those charges to get water service, even though they occurred before the new owner took possession.

No CC&R required.

[damntexdem]

3. And, hey, I want a pony.

But I'm not going to get one. Nor should these HOAs (pronounced as one might think) get new buyers to pony up.

[WeDidIt]

6. They will if it's the law

or they could face eviction from the HOA.

[liberalhistorian]

14. Or they could just choose to not buy the property and

it can continue to sit there empty, costing the HOA more money, more than if they'd gotten a buyer and not tacked on the back dues. Having been a real estate paralegal and knowing the "intelligence" of many HOA directors, I'm not at all surprised that this is the tack they're taking.

[laughingliberal]

17. That would be my thought. Move on down the road where there isn't an HOA. nt

[WeDidIt]

21. The only places where there isn't a HOA in my area

are rundown neighborhoods with high crime levels.

[Juneboarder]

32. +1000

and things won't get worse as our economy tanks...

[liberalhistorian]

37. I'm fortunate in that there are almost none in my state,

which is quite rural. Even in the "urban" areas, there aren't many. As much as I complain about a lot of the politics in this state, one thing I can say for many of the people is that they wouldn't put up with the kind of conformist bullshit required by an HOA. They like their independence and freedom to make their own decisions in their own houses and properties.

Now, in my former state of Ohio, that's a different story. HOA's up the wazoo. I think it just depends on the area and region of the country you're in.

[tammywammy]

40. Texas is poised to take a smack down against out of control HOAs

Such as this one:

http://www.dallasnews.com/sharedcontent/dws/news/city/northeasttarrant/stories/032810dnmethoa.4195fce.html

COLLEYVILLE – This affluent community, full of beautiful new homes and shops, doesn't look like a hothouse for revolutionaries hellbent on overthrowing the established suburban order.

But a group of residents in five luxury neighborhoods has grown tired of their homeowners associations dictating everything from how many day lilies to plant in a flower bed to what companies they can hire to put in a swimming pool.

In fact, real-estate developer David Bagwell has angered so many homeowners that they've banded together to sue the homeowners associations that enforce his strict architectural standards.

"We walked into a nightmare instead of a dream house," said Gary Heape, 73, a software developer who built a home in Bagwell's Old Grove neighborhood.

Heape and his wife, Ann, said they no longer speak to Bagwell. Their lawyers exchange letters about issues such as the day lily count and the details of wrought-iron fence construction.

"It's the most bizarre thing I've ever dealt with in my life," Gary Heape said.

-snip-

[Dappleganger]

43. Good for them to fight back! nt

[tammywammy]

44. These HOAs are run by the developer and his stooges

The current homeowners don't even have voting rights, so the whole "you can change the rules if you don't like it" is out the window. He's been caught peeping at people's backyards to make sure it maintained his vision, and even only allows certain people to do work (I'm sure he gets a kick back from the pool installers).

Those neighborhoods are having a hard time selling any houses in the developments.

[WeDidIt]

60. Every HOA is one election of the board away from chaos

Seriously.

We only exert our power on the deadbeats. Everything else is about keeping our property values up and the current board (which has been in charge for the past five years) has only seen a five percent drop at te worst portion of the housing bubble burst.

[WeDidIt]

20. Nope, the HOA eventually gets the money

Every time.

I am on the board of our HOA. We have never faile dto get every penny and it hasn't affected sales one whit.

[Liberal Gramma]

56. I think the law may vary from state to state

Our HOA lost about 2K in unpaid dues on a foreclosure. The new owners were not liable for the outstanding dues. Looking at the issue from the HOA's viewpoint, the home in question continued to receive services--gardening, repairs, painting, etc--even though no dues were paid. The flip side of that arguement is that the value of other properties could decrease if one neighboring home was not maintained.

[WeDidIt]

10. That depends upon the law.

This is also why one purchases title insurance when one purchases a home. The title insurance company must do a title search to determine if there are loans.

If you're stupid and fail to purchase title insurance, you're liable. If you bought title insurance and the title cleared without the lien showing up, the title insurance company is liable.

[liberalhistorian]

38. Most lenders require a title search and title insurance

as a condition of the loan, so most people don't have a choice in getting them. Which is the way it should be, of course, it's really stupid not to get at least a full title search, let alone title insurance. The only time I can see where someone wouldn't get it is if they're buying it outright and, thus, don't have to comply with any title search/insurance requirements. But they should still get it on their own, frankly. I'd never, ever buy a property without a title search and title insurance. It's just basic common sense.

[WeDidIt]

61. HUD auctions in my state are done with no title search

which ends up surprising the people who thought they got such a bargain.

[Juneboarder]

4. The current homeowners are forced to pay

through their dues. If the buyer wants in on the association property, then they should pay as well. The community is there as a community; not for one person to get a better deal than the other...

[DURHAM D]

11. Exactly -

and the real estate agents can go pound sand. They have no idea the reality of the situation cause they just want to get their commission. Damn crybabies.

Looks like most people don't understand that if someone in the community is not paying their share of the common expenses then the paying owners have to make up the difference. The expenses are fixed.

Feet dragging by lenders has added a tremendous cost to the people doing the right thing and paying their assessments. I would want my deadbeat neighbors to face consequences. In every community higher costs are falling into fewer and fewer laps.

[liberalhistorian]

16. We're not talking about "deadbeat neighbors" or

going after owners who aren't paying their fair share and expecting others to pick up the slack for them. We're talking about prospective buyers that had nothing to do with running up back dues and who will then be turned off to buying a property that they're expected to shell out thousands of extra dollars for when they had nothing to do with the bill in the first place. The property will then continue to sit empty, which means that the other members are taking up the slack when they could have had a buyer for it. I don't blame the realtors for being upset, if they can't find buyers for the properties.

[laughingliberal]

19. I'd take it as a gift to let me see what it's like to deal with HOA's and move on

to looking at property in areas that don't have HOA's.

[Juneboarder]

31. Yes, and that is the option the HOA's offer...

there is a cost/benefit ratio to everything.

[Juneboarder]

29. I have to disagree...

if a prospective buyer wishes to buy into a community, then I feel they must absorb what the community has set forth for all owners past, present and future. The HOA has the responsibility to maintain reserves, structures, utilities, (roads and gates in some neighborhoods), parks, etc. They pay for this by collecting dues from each home.

If a prospective buyer disagrees with the community aspect, then they should look elsewhere. All communities are facing this; however you'll also notice that these communities still keep up their curb appeal. If you drive through neighborhoods outside of HOA's you'll notice way overgrown yards (or no yard at all due it dying), somtimes boarded up windows, and that is usually the tip of the iceberg when it comes to the abandoned homes.

At least the HOA is maintaining the property so it looks appealing to the buyer... more "move in ready" than your abandoned home outside a community at this point.

[liberalhistorian]

47. Ummm.......excuse me, but there are no HOA's in my town

or any of the surrounding areas, and there are very few in my state. Yet, my neighborhood and most of the others look pretty damn good, with people caring for their yards and properties, etc. And they have the freedom to decide things regarding their own homes and properties themselves without having it dictated to them.

[Juneboarder]

50. Well I'm glad things look good

in your little bubble.

:sarcasm:

Take a look at a majority of California, Nevada (Las Vegas area), Arizona, Utah, Oregon, Washington... Oh I guess since it's all on the west coast "we" don't care?

[DURHAM D]

33. Did you read the article?

Part of the problem (and this is true in every association) is that the current owners have just simply opted not to pay. They see others not paying their share of common expenses so they stop paying. When they find out that eventually the neighbor (property) who they thought was going to get away with something have to pony up they start paying their share again because their faith is restored.

[liberalhistorian]

41. So making new owners who had nothing to do with it pick up the

slack of the deadbeats is the way to attract buyers and avoid having properties sit there costing the HOA more and more money? It's the best way to get the deadbeats to pony up? Right. I wouldn't want to be a part of a community that made me responsible for the irresponsibility of the past owner.

And in my experience as a (former) real estate paralegal, most HOA's don't hesitate to file foreclosures when people are even just a couple months behind.

[DURHAM D]

46. You changed the subject.

As for your last paragraph - either you were not really a real estate paralegal or you didn't understand the filings that went across your desk.

The Board of Directors is obligated to file liens on the property after X number of months of failure to pay. The obligation of the Board is dictated by the governing documents. Foreclosure filings are at the end of a very long process - not the beginning. In short, I don't believe you.

[liberalhistorian]

49. I don't really give a damn if you believe me or not. It depends

on the state and the laws of the state. I think I knew my job and my work far better than you.

[DURHAM D]

54. So there are no HOAs in your town and few in your state yet -

through your vast legal experience with HOAs you know all about how HOAs function and that they start foreclosures at the drop of a hat. Right...

[liberalhistorian]

63. I've only lived in this state for five years. I previously

lived in Ohio for thirty years, and that was where I was a real estate paralegal for several years. In that state, HOA's are everywhere.

[tammywammy]

Read post 22

"Had the new owner refused to pay the $4000, our association would have filed for immediate judgement and taken posession of the property and we would have been 100% wihtin our legal rights. Furthermore, we would have evicted within six weeks of his failure to pay"

That's an example of an HOA more than willing to file quickly on past-due HOA fees.

[DURHAM D]

55. Illinois is unique

when it comes to pecking order of interests.

[tammywammy]

52. dupe

[WeDidIt]

5. In Illinois, it's the law that new owners are responsible.

In our association, one foreclosed home that ended up in HUD owerd almost $4000 in back dues and legal fees. HUD sold the home at auction. New owner had to pay in full.

[DURHAM D]

7. HUD is obligated for the assessments for the period that

they held the home. I hope they paid their share. The new owner should have only been responsible for the unpaid amount prior to HUD taking possession.

[WeDidIt]

9. Nope, HUD is the one entity that can legally pass it on.

Banks cannot. HUD can. HUD can sell at auction without a title search for existing liens.

The new owner failed to read the fine print on participating in a HUD auction. It's very clear in the documents that HUD does no title search and responsibility for payment to any further claims beyond the creditors who financed the home originally, including all mortgages and home equity loans, are the responsibility of the buyer.

Had the new owner refused to pay the $4000, our association would have filed for immediate judgement and taken posession of the property and we would have been 100% wihtin our legal rights. Furthermore, we would have evicted within six weeks of his failure to pay

[DURHAM D]

12. What state are you in?

You clearly live in a state that has better state statutes as regards powers of HOAs. I know that some states have really improved on these issues but I am in North Carolina and its has no interest in improving the position of the associations to work for the good of the whole.

I have never dealt with a HUD auction but do know that if they move property through a normal sells process they pay the assessments (without argument) for the period during which they held it.

[WeDidIt]

22. Illinois

and yes, they gave us extreme power.

For example, if a bank forecloses and sells, the HOA gets all owed back dues BEFORE any other debt gets paid.

The only time we've ever had to go after a new owner was this and one other HUD foreclosure. In both cases, the homes sold for about 60 cents on the dollar of the current market value. Both were at lows in housing prices in this area and in both cases, had the new owner failed to pay, the HOA would have evicted within six weeks of our first demand to the new owner.

[aikoaiko]

15. My condo association puts a lien on dues deadbeats so that it comes out of the sale of the condo.

In other words, the sellers pay.

Its stupid to make the new buyers pay for it.

[WeDidIt]

23. Florida obviously has screwed the pooch on HOA laws. n/t

[laughingliberal]

25. Yes, but we're talking about foreclosed properties

They generally don't bring enough at auction to pay off the mortgage let alone any liens.

[WeDidIt]

27. See, that's why Florida needs to follow Illinois' example

Here, when a home is foreclosed, the HOA is first in line for all payment, ahead of even the foreclosing entity. The only time when this does not hold true is a HUD foreclosure, but HUD foreclosure auctions make it clear the buyer is responsible to cover all liens.

[liberalhistorian]

64. What about tax liens? Does the HOA have

priority over those, too, in Ill, or do the tax liens take priority?

[WeDidIt]

66. HOA is always first in line

Ahead of everybody else, including state and local government.

[aikoaiko]

57. I think our liens come first.

But I'm not sure.

[la_chupa]

24. it seems wrong to make you pay for something you didn't receive benefits for

If I didn't own the home this past winter then how did the HOA keeping the alleys cleared of snow benefit me?

If you buy a house that has back taxes on it do you have to pay or does it come from the proceeds of the sale?

[flvegan]

26. I can see a lot of HOA Decs getting amended to make their lien rights a superpriority.

Some HOAs have already done this. Basically it states that regardless of when a HOA lien is filed due to nonpayment of fees, that lien position reverts to the date of the filing of the original Declaration.

I'm sort of amazed that the HOA lobbyists haven't gone after changing the Statutes for an HOA to mimic those of condo assoc rights for REO properties.

[hobbit709]

28. All the more reason to never buy where there's a HOA

I don't care how good the price is, if there's a HOA it's NO SALE for me.

[tammywammy]

30. Yep, I'm glad I don't have an HOA. n/t

[liberalhistorian]

45. Me three. Which is why I'm glad they hardly

exist in this state.

[laughingliberal]

35. That's my thought. If I'm buying a property I want control of it

We never looked in an area that had an HOA but some friends of ours who moved here from CA years ago did. It was a nice section of town but before they did the deal (thank goodness) the husband began reading all the restrictions on adding on to the house, colors they could paint it and so on. He walked away from that one and found a larger house in an area without an HOA and lived there very happily for the next 20 years til they sold it and moved out of state.

[Dappleganger]

42. HOA's come in all different flavors.

Here in FL they're nearly impossible to avoid if you live in the suburbs, but typically older neighborhoods have HOA's with less restrictions and lower fees. We have friends whose HOA is actually voluntary and their neighborhood is about 30 years old. They've never had any problems with anyone not contributing or being in compliance.

Our HOA is too lax in some areas and too strict in others, but overall it's pretty decent. Their main job is to take care of the entrance landscaping, common areas and the four man-made ponds and the creek (which we're on). It also takes care of algae growth and mosquito control. All that for $225/year. And we have no bright purple or lime green houses. ;)

[SoCalDem]

36. Well.. good luck to them with that idea

the biggest part of foreclosure is the part where the people LEAVE and quit paying ANYTHING :)

This is a feature of HOAs that people don't realize.. As people move away, the costs get spread out between the remaining people and the costs go higher.

I know that common space needs maintaining, but some of the HOAs I have heard of are like another mortgage payment, and too many people get talked into areas with them before they realize how oppressive that extra payment will be, and how irritating it is to have the HOA telling you what kind of curtains you can have and what color you can paint your house..

HOAs have always reminded me of upscale trailer park space rent..

[Juneboarder]

48. On a side note...

Has anyone read The Association by Bentley Little? I would NEVER want to live in an association like this; where the stumpies run rampant...

http://www.allreaders.com/topics/Info_6865.asp

[NNN0LHI]

51. Be like buying any house with a lien on it isn't it?

[pitohui]

59. yeah what's the big deal?

it's my responsibility when buying a home to find out what liens are against the home

i bought a foreclosed home many yrs and beers ago and i had to get a special permission from the parish that excused me from having to pay the back taxes, but i understood going in that the parish was not required to excuse me from making that payment and that i needed to be aware of it when buying the house

[Orsino]

53. Silly.

This makes the house whose owners have been in arrears the longest the least attractive to buy.

Two buyers who purchase on the same days would be charged different amounts to buy into the HOA?

But at the meeting, which would have been attended by current owners, I'm sure it sounded like a good idea--and easier than collecting judgments, I'm sure.

[Mike 03]

58. I'd love to own a home in Orlando. To cut to the chase, how much would it cost

to live in Orlando? Three bedroom, two bath, close to Disneyland/EPCOT.

[Dappleganger]

65. You could find a real bargain today.

Even more so in another year. Seriously!

[Touchdown]

62. Why don't they charge the foreclosing banks for the dues? Oh' yeah, Nevermind.

That's not what's REALLY meant by the term "owner". First rule in American shakedowns... Never extort anybody bigger than you. :eyes: