Homeowner Association Foreclosure

From the AP

Thousands of Americans who have generally kept up with their mortgages are still in danger of losing their homes because they made a fateful trade-off in this shaky economy — they let their homeowner association dues slide.

Many homeowners are learning to their surprise that condo and neighborhood associations that oversee security patrols, mow lawns, plant flowers and clean the community swimming pool may have the right to foreclose when dues aren’t paid. That right is often written into the purchase agreement signed by the homeowner.

I’ve never really understood the desire to live in an association controlled community but I must confess I currently live in one.  The major restrictions, as I recall, are that your trees can’t be more than 24 feet high, you can’t have a clothesline visible to your neighbors and your landscaping isn’t supposed to be a mess.  Reasonable concepts I think and it’s less than $50.00 a year.  Unlike the AP story there’s not much chance of that turning into a hardship for anyone.

When the association fees become significant there’s a much greater risk of foreclosure due to the non-payment of association dues.  I remember a specific condo development in the mid 90s that had very steep dues considering the price of the units, but there were quite a few visual amenities such as waterfalls and streams throughout the complex.  The problems start when a few owners leave or stop paying dues creating a cashflow problem for the association which leads to deferred maintanence which leads to more people leaving and/or not moving in.  The cashflow problems start to snowball and the complex turns into kind of an eyesore.

I’ll stick with the low/no association dues and involvement, it seems to have worked out alright up to this point.