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Subject: Foreclosure due to assessment, fines, and attorney fees

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BillR8
(Texas)

Posts:3

04/01/2008 9:53 AM
My HOA filed a lien and ultimately foreclosure of my property to collect on these liens. The lien consisted of assessments, interest, late fees, fines, and attorney fees. I've been paying all my assessment dues on time ever since the subdivision was established, but they apparently had adopted a new collection policy 2 yrs after the CCR documents were established allowing them to apply all monies to fines and attorney fees first with assessment dues being last to be paid. My problem was that I did not know that they had adopted this policy and did not have any notations with the assessment payments I've been making. Since I've been making these assessments 2 yrs prior to their adoption of this policy, do I have a strong case in court if I argue that these payments were amounts that corresponded to the exact amounts of the assessment dues and at time intervals when the assessments were due as to not be grand-fathered into the new policy and that the payments should have been credited to assessment dues and not fines or attorney fees? Texas property code section 209.009 prohibits them from foreclosure based on fines and attorney fees associated to those fines. My question is, if I now pay for all the deliquent assessment dues (deliquent b/c they used my actual payments for fines and attorney fees) including late fees, interest, collection fees, and attorney and leaving only fines and attorney fees associated to fines in the balance prior to the foreclosure date, can they still foreclose on the property without violating section 209.009? All comments to my situation are welcomed.

MaryA1
(Arizona)

Posts:2505

04/01/2008 10:14 AM
Did you have outstanding fines for CCR violations? If so, why didn't you pay them? In answer to your question. I would suggest you pay the whole lien and not have the threat of foreclosure over your head. Let this be a lesson learned! Have you checked state law to determine if they can apply your payments this way? In AZ, payments must first be applied to assessments, then unpaid charges for late payment of assessments, then for reasonable collection fees and unpaid attorney fees and costs incurred with respect to those assessments. Anything left over is then applied to any other unpaid fees, charges or penalties, etc. Regarding the change in policy. That change should have been mailed to all property owners. However, I've never heard of such a change being grandfathered in. It would apply to everyone.

GlenL
(Ohio)

Posts:1470

04/01/2008 11:13 AM
Bill get an attorney to address this matter ASAP before you lose your house and do what s/he tells you to!!! While I am sympathetic to the situation you find yourself if, I hope you realize the whole thing could have been avoided if you had simply paid the assessments on time. That said I would write a letter to the BOD requesting a copy of the Association's debt collection policy, specifically a copy of the policy that allows them to apply the monies as you have described. Chances are when they changed the policy they notified ALL the homeowners. I can't tell you the number of times we have sent out notices put policies in the newsletter etc.; only to have people pull the old I didn't know routine. Now I'm not accusing you of doing this deliberately sometimes the amount of mail a person gets is overwhelming and you can get stuff you think doesn't apply to you and toss it.

BillR8
(Texas)

Posts:3

04/01/2008 12:21 PM
Mary and Glen, thanks for your comments. To answer your questions Mary, I did not pay the violation fines because of the following: 1. The violation notification was not in the form that was required by the bylaws (ie, at times, it did not include references to the violated sections of the CCR, or provide information on how to remedy the violation) 2. When the violation did reference the CCR, it was a subsection of the CCR that was very vague (ie, the subsection states "The property should be managed so that it will not look unsightly from the street or neighboring properties.") The reason why I say it's vague is because I wasn't sure what on the property was violating this section. 3. I also sent letters to the management company disputing the violations and requesting more information on where the violation was, but there was no response. The state law does not have any provisions allowing nor prohibiting the HOA from applying the payments in the manner that they did although there are a few bills that address this but have not been passed. If I had put a memo on my payments to solely apply them to the assessment dues, then I think I would've been ok. The HOA just found a loophole in the property code. To answer your questions Glen, the assessment dues were always paid 3-4 days prior to the due date. The problem is that when the payment was received, the HOA applied it to fines and attorney fees. So, when the assessment came up due, they would charge a late fee because it was not paid. I do have a copy of the collection policy now after researching online, but it's pretty much after the facts. Had I known about the policy a month ago, I think I would not be in this predicament.

MaryA1
(Arizona)

Posts:2505

04/01/2008 1:01 PM
IMO, it's really best to go ahead and pay the violation and question it later. This would avoid an attorney getting involved which raises the outstanding debt. If you can prove to the board the violations were sent in error, they should have no problem refunding your payment or applying it the next month's assessment. Of course, I'm speaking of a board that operates in the best interests of the assn and it's members. :-( But, the bottom line is you don't ever want to have any outstanding debts with the HOA, even if they are in error! But, as I suggested in my first response, you really need to pay up the whole debt and avoid the foreclosure. You can always go to court to try and settly any inequities at a later date. Don't hesitate and find yourself on the street! I understand there is no judicial foreclosure in TX, so you don't have the protections afforded by a judicial foreclosure. Mary

BillR8
(Texas)

Posts:3

04/01/2008 8:42 PM
Mary, I think you heat the nail on the head. If the HOA acted in the best interest of its members and association, I don't think I would be in this situation. TX does allow both judicial and non-judicial foreclosures and the HOA decided to do non-judicial to avoid a lot of complications.

RobertR1
(South Carolina)

Posts:2525

04/02/2008 5:09 AM
BillR; Seems to me Bill, you should be allowed to try and work out a mutual agreement with your management. Not knowing the other side of the story, maybe this has been considered. However, Mary and the rest are one target, so pay up and get this behind you. Yo seem like a smart guy and I suspect you may be playing a little game with the management and knew all along things were going to come to this. You may have some legimate concerns about your HOA and it is probably the right thing to do to look to the State Laws. In reality though, states are tending to look at HOA as a sort of a "Mini Town" with the authority and blessings of the state to keep your own house. They set the laws and restrictions, you live under them by choice so govern yourselve. It has also been my erperience that the most change for the good comes internally and usually from some new blood infused into the association Board. Just a general observation.

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