You might be shocked to learn that, yes, just like a bank, a homeowners association (HOA) can foreclose on a home. This type of action affects thousands of Florida homeowners, sometimes over minor amounts of overdue memberships dues and late fees every year. It doesn’t matter if you own your home or are still paying a mortgage on it. These organizations can and will take it from you should you fall behind on your HOA fees.
How a HOA Can Foreclose on Your Home
You probably pay a predetermined membership fee as an HOA member every month. Your association uses this money to pay for the different expenses of your neighborhood, like snow removal, lawn care, and pool maintenance. By joining, you agreed to abide by specific rules as well as the consequences of violating your agreement.
If you have fallen behind on your monthly fees, your HOA will first place a lien against your home in an attempt to motivate you to pay your outstanding balance. Florida Statute 720.3085 requires that you be given notice of their intent to take this step and give you a limited amount of time to pay off the lien before filing a foreclosure action against your home. Remember that the balance you owe likely includes legal costs, interest, and late fees on top of your monthly membership amount.
Should you fail to pay what is due, your HOA must then send you another notice outlining their intent to foreclose on the lien. This, too, must be sent well in advance of their filing (45 days or more), and you still have an opportunity to settle the debt owed. According to Florida state law, failure to send both the lien and foreclosure notices means they shouldn’t be able to foreclose on your house until they do so correctly.
Stop HOA Foreclosure with a Qualifying Offer
So, how do you put the brakes on a foreclosure proceeding with your Florida HOA? One option is to submit a qualifying offer to the association before a final judgment gets entered. This isn’t the total amount owed but a counteroffer to settle the matter and stop your home from being taken away.
The following criteria disallow homeowners from making an offer to their HOA:
- You are in bankruptcy before or after submitting a qualifying offer
- The property is already in foreclosure or subject to a tax sale. Should your home fall under this category while your submission is pending with the HOA, you no longer qualify.
- The HOA foreclosure trial will start within 30 days of your making the offer
Using Chapter 13 to Stop a HOA Foreclosure
If you cannot pay the amount due to your HOA, a Chapter 13 bankruptcy might be one method to halt the foreclosure action against you. When filed, the court will issue a stay against creditors, which goes into effect immediately once filed. This stops the HOA from foreclosing and any debt collection activity.
Some or all fees you owe may also get discharged, but consult with a reputable foreclosure attorney to help determine this amount. Typically, once a debt gets discharged in Chapter 13, the debtor no longer has any personal liability for the outstanding balance. It also means the HOA can no longer pursue you for that debt.
When it comes to a lien placed against your home by the homeowners association, this type of bankruptcy removes it from homestead properties. This is because state law protects residents’ primary homes from creditor judgments, though speak with an attorney to determine if your home meets the legal requirements.
It’s important to note that Chapter 13 bankruptcy makes it possible for homeowners facing an HOA foreclosure to create a five-year payment agreement to settle their debt. The association has no choice and must allow you to do so.
Don’t Lose Your Home to HOA Fees, Get Help Today
Have you received foreclosure threats from your homeowners’ association and are unsure of your legal options? Speak with experienced bankruptcy lawyer Marc Brown, P.A., about your current situation and learn more about your rights and what steps you can take to save your home.
His office has represented South Florida families for over a decade and helped them navigate the stressful bankruptcy process. Get sound advice and skilled representation to help you find the debt relief solutions you need to move forward with your life. Contact us today and schedule your free consultation.