Belong to a Homeowner’s Association? Pay Dues On Time or Risk Losing Your Home

A Homeowners Association serves a purpose – to manage the common areas of a community including parks, pools, and roads. Homeowners who live in the area are obligated to pay dues that usually cost between $100 and $10,000 annually. The cost depends on the location and the amenities included. In addition to the dues obligation, homeowners must abide by the association’s laws. They can dictate the kind of landscaping you can use, the color of your home, and even where you can park your car. These associations can impart fees for not following the rules and can even take your home away from you in a matter of weeks if you don’t pay the dues.

Photo by Bill and Mavis via Flickr

It seems utterly bizarre that this situation can even happen but it did and it does. A member of the US military came back from Iraq last year to find that his $300,000 home had been sold for $3,500 while his wife and kids were still living in it. The home was foreclosed upon not because he was past due on his mortgage payments (his house was paid in full) but because the family missed two payments of their Homeowner’s Association dues. This story, as told on, is unbelievable but true. Not only did it happen to a member of the United States Army, it can happen to you.

How Is This Legal?

There are 33 states where a Homeowner’s Association can file liens or foreclose on a property without going before a judge. The practice is referred to as a ‘nonjudicial foreclosure’ and the HOA can legally sell your home with no legal personnel involved. In Texas, were there are more than 30,000 HOA’s that have cropped up around the state. They have the ability to bring the foreclosure process to an end in just 27 days from start to finish.

Homeowners who miss a few hundred dollar payments can easily end up owing a debt of several thousands of dollars. Added to that cost is the legal fees the association incurs trying to get their money. If a homeowner cannot pay the amount they owed plus the HOA’s lawyer fees immediately, they can lose their home.

Those who do pay the dues and the fees are helping the HOA management companies and the attorneys involved make millions of dollars a year. Those who cannot come up with the money face foreclosure. In Texas alone, the percentage of foreclosure filings due to unpaid HOA monies has increased from 1% to 10% since the recession hit.

What Can You Do to Protect Your Home?

Unfortunately, the only true preventative measure you can take when you buy a home in a HOA community is to pay your dues on time, every time. If you cannot keep up with the dues associated with a community, you might want to consider relocation altogether.

If your present financial troubles are just temporary, you may want to consult with the HOA representative or look over any documentation you received in the beginning to see what can be done to keep you straight and prevent further action.

Legal advisors recommend any homeowner being foreclosed upon directly contact their Homeowner’s Association representative and plead for mercy. As most laws are on the side of the HOA, homeowners in default don’t stand much of a chance if the association is not willing to work with them.

If you feel you are endanger of a foreclosure for your HOA, find out what the law dictates in your home state. Texas laws seem to be heavily in favor of the HOA but in the other 32 states, laws do vary and can affect the outcome of your particular situation.

Are the Laws Going to Change?

Currently, Texas law allows a HOA to have essentially more power to foreclose on a property than any city or county in the state. Many are expressing concern that associations now hold too much power, especially in light of the fact HOA’s can even foreclose on homes because of unpaid fines. Unfortunately, because of a loophole in the laws in Texas, homeowners face losing their home over very small amounts of money. New legislation is up for consideration to give the homeowners more protection in the state.

There have been reports that members of a HOA have been the purchasers of properties the association foreclosed on because of loopholes in the law. The military family in Texas is set to fight their case in court next year. If the individual involved was not a member of the US military, he would not even have legal options to get his home back but due to the Servicemembers Civil Relief Act passed in 2003, military members fighting oversees are protected from nonjudicial foreclosures. The outcome of that may change the way Homeowners Associations operate in the future.

About the Author

By , on Jul 15, 2010
Tisha Tolar
Tisha Tolar is a co-owner of Trifecta Strategies, LLC and the author of Gen X. When she is not busy being a fiction writer, she writes personal finance articles for several web sites, including

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Leave Your Comment (12 Comments)

  1. Curious in Minnesota says:

    My mother-in-law passed away 2 1/2 years ago. Her condo has been for sale since. It is in a 55+ building and, although accurately priced, there just isn’t a market. Question: money is running out of her estate account to pay the mortage and association dues. Since no one is living in the condo, and hasn’t for 2 1/2 years, do we still have to pay the association’s dues? They are $225 a month! Almost the cost of her mortgage payment.

  2. Tisha Tolar says:

    All sources used for the article did not pinpoint an actual list of states but I was able to find a list of states that permit a non judicial foreclosure which is what the HOA’s use for such actions. The list can be found here hope that helps.

  3. DeeDeeMinyon says:

    Please give a link to where the list of 33 states can be found….I am the third person who has asked for this…Please respond
    Thank you

  4. “I found the ability to foreclose people’s paid off home very UN-AMERICAN.”

    It’s not just un-American, it’s just plain cruel and unusual punishment. I don’t see how it can possibly be justified to swipe out someone’s entire home from under them over a few hundred dollars or a minor infraction.

    Have you guys heard of the soldier’s home who was swiped out from under him and then sold for pennies on the dollar to a friend of the board, while he was overseas? The last I heard, I believe he was in a legal fight to get his house back.

  5. Gary Miller says:

    As a homeowners association treasurer, I can tell you how unfair it is for those who pay their dues on time to have to carry the dead beats. Sure, those having difficulties should be given every opportunity to make good, including a payment plan, but if people can walk away from the agreement they made to pay for facilities that everyone gets to enjoy, then the association cannot keep these facilities functioning, in good repair and safe. alternatively, we have to raise the dues on the good people who pay their bills. There is no free lunch and the author of this article would do well to be more balanced instead of sounding as though the volunteer Board members, who truly care about their communities, are some sort of oppressive regime!!

    • Pinyo says:

      @Gary – I am HOA member who pays his dues and while I agree with you regarding the fairness and need to enforce certain rules, I found the ability to foreclose people’s paid off home very UN-AMERICAN.

      Taking them to court, forbidding them from using community facilities, and making them the outcasts of the community are all fair game, but taking their home away? That’s too much power for any non-governmental entity. And to have a HOA board member takes the house at a ridiculously low price tag? Despicable.

  6. James says:

    HOA’s can be a good thing if you like local pools, tennis courts, parks, well kept lawns. if you don’t like these things then maybe an HOA is not for you they can get costly over time and quite frankly they are not for everyone.

  7. The only way to put an HOA in its place is to fight fire with fire. Suing the board members, as individuals, in small claims court costs a few bucks and makes their lives just that much more difficult. Calling them out for every possible infraction of their own is another stratagem, too. (Every board member has either an oil spot on his driveway, or an ecru window shade when only eggshell is approved, etc.)

    I don’t mean to sound too bellicose, but the number of HOAs that exist as extralegal entities, answerable only to themselves, is horrifying.

  8. Jenna says:

    This is why it’s important to know what the expectations are of your HOA (if you have one).

  9. Split Cents says:

    I’m not positive, but I believe homeowners in many states should have a right to “redeem” their home within a certain time period (typically 3-6mo), saving it from foreclosure. To do so, they would need to pay the total amount owed plus accrued interest and fees incurred by the association. Again, I’m not sure if this option is available in these cases in Texas, but often there is some right to redemption available.

  10. Zahid Lilani says:

    Yeah, I would like to get the list of other 32 states. Just curious if California is one of the states.

  11. Busymom says:

    Wow! Where can we find a list of the other 32 states?

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