Liens +

First background. We're a small West Virginia HOA with 5 acre lots, half developed, with low annual dues and little expenses. I'm a new member and now president.

We have some land owners (not developed) who are years behind in their dues, we have put a lien on the property, but we're interested in being more proactive in getting the money owed. We want to do something like go to a collection agency to at least get a part of the money owed, but don't want to spend any money in pursuing this if not a viable and legal option.

Any assistance/advice would really be appreciated.

Also, I know in some states, hoas might force a non-judicial foreclosure, but you're still fourth in line. Not worth it.

I second Susan's advice.

My POA covers about 100 square miles in north-central Arizona. We have about 1600 lots all 36 acres or larger. The lots were sold without improvements, except for the dirt roads. Since sales began in 1996, only about 10% of the lots are occupied by full-time residents and another 10% have some sort of accommodations for part time living. The rest are undeveloped.

Several years ago "for sale" signs began popping up everywhere on the unimproved lots. The signs are still there but no lots have been sold. Undeveloped lots, especially those in out-of-the-way locations have almost no value in today's market. As many as 25% of our owners are delinquent on their assessments, which average only $130 per year.

Our current board, none of whom has any business management experience, decided to embark upon a Mission From God and collect every last cent that was owed. I have yet to see the actual figures but my estimate is that the total that was owed was about $25,000. Our board hired the worst law firm in the state to seek money judgments and to foreclose where possible. They filed sixty lawsuits, charged us over $140,000 (brining our loss to $165,000), and collected less than $20,000 from the delinquent owners. We did foreclose upon one parcel that has a cabin on it and someday may be able to sell it for more than it cost us, but there were no bidders for it when the sheriff auctioned it for the court.

No business collects 100% of its debts. HOA BOD's should memorize that. Do not spend your hard cold cash chasing money that is owed and may never be collected.

Unimproved lots are not consuming your HOA's resources. File the liens and wait for a sale of the property.

Even if you were to get title to one of those unimproved lots, you would face the same problems trying to sell it that the present owner faces. Most homeowners today cannot hang on to their current home; there is little market for second home sites. The banks usually do not lend money for unimproved land, so you would have to find a cash buyer. Real estate agents are not going to spend much effort marketing worthless property; their commission would be seven percent of zero. Your HOA will be responsible for paying taxes on the lot and you will still not collect an assessment on it.

My suggestion to you is to locate the owners of those delinquent lots and -- gasp -- talk to them. Don't send letters, threatening or otherwise because they are already getting a ton of demands that all end up the trash unopened. If possible, go talk to them in person. Find out why they have not paid and see what you can do to get them back on track.