All across the country, struggling homeowners are making tough decisions about what bills they are going to pay. And many times, their homeowners’ association bill is relegated to the bottom of the pile. In Carson City, Nevada, the HOA lobby is making some serious and legislatively-supported moves to make that decision a little more costly. Senate Bill 174 and Senate Bill 254 would, respectively, enable HOAs to collect as much as $1500 in excess of the debt owed if they are forced to turn over HOA dues to debt collection and require homeowners and HOAs to undergo formal mediation and arbitration should homeowners lodge complaints against their HOAs [1]. The latter can effectively prevent complaints because homeowners may not be able to afford the fees for the mandatory mediation. The former, critics argue, could push distressed homeowners right over the edge into foreclosure, which some HOAs actually believe is better for business than having a delinquent homeowner in the house because often the foreclosing lender or the next buyer will pay off the HOA lien.
Homeowner advocates say that ultimately, both of these bills can lead to homeowners being “trapped” into foreclosure [2]. They point out that 85 percent of arbitration cases go against the homeowners. However, state Senator Allison Copening says actually SB 254 helps homeowners because it limits the cost of arbitration to far less than the going rate, and points out that homeowners who feel that they are being harassed by their HOA often “discover that they were indeed in violation of HOA codes, covenants and regulations when by-laws are presented at mediation.”
Do you think that these bills will be good for homeowners, HOAs, both or neither?
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[1]http://www.lvrj.com/opinion/hoa-lobby-puts-on-the-heat-in-carson-city-123181788.html
[2]http://www.lvrj.com/business/hoa-official-state-senator-debate-hoa-legislation-122908499.html?ref=499
If the HOA Lobbyist are pushing the bill, then it is only good for them. But the process is about the same for HOA dues as making or not making your mortgage payment. You fall behind for three months or more on your mortgage, and then the lender looks to start the foreclosure process with a notice of default(in California and other trust deeds states) and then you have time to cure the default or make some payment plans. You can do the same thing with the HOA dues. They might play hard ball with you, because they know that if the property is foreclosed on they are going to get paid by the new buyer even if it is a short sale. You as a homeowner just have to have a plan, and you can usually work something out.
You are correct that failing to make mortgage payments and failing to pay HOA dues do, ultimately, have similar conclusions. However, in practice HOAs often abstain from foreclosing or opt to wait for lenders to foreclose instead so that they do not have to handle the legalities. This legislation has the potential to give HOAs more power in actively foreclosing than they have previously exercised. But you are right: ultimately, it all leads to the same place if you have financial obligations that you cannot or do not fulfill. Thanks for the comment, for reading, and for the clarification! ~Carole