The process may be rare but one Ahwatukee Foothills man found out the hard way that ignoring homeowners association fees and assessments may result in the foreclosure of your home.
Tom Uriell said he's a firm believer of keeping neighborhoods nice but that when his mother and father fell sick the past two years he's been in and out of town and not paying attention to his home in Mountain Park Ranch.
"They both passed away recently and this sort of just fell through the cracks," said Uriell, who started receiving notices and fines from his HOA for not keeping his palm trees trimmed about two years ago. "It's partly my fault because I got numerous phone calls and I just said I'll get to you when I can."
The fines from the HOA grew to more than $480. Eventually, Uriell received notice of a lien being placed on his home and later was informed that his home was going to auction.
He says he paid the fines he owed 10 days before auction but somehow communication was lost and the home he bought for $400,000 in 2005 was sold for $50,000 at auction.
A lien is a claim or hold to some property that allows the creditor to ensure they get the money they're owed. HOAs have an automatic lien on any property within a planned community on Jan. 1 of each year for annual assessments or normal membership fees each homeowner is required to pay. If the homeowner doesn't pay, the lien could lead to foreclosure.
According to Arizona law ARS 33-1807, an HOA cannot foreclose on a home unless the homeowner is delinquent in the payment of the assessment for a period of a year or if the homeowner owes more than $1,200 to the HOA, whichever comes first.
The second part of the law says the HOA has no lien over monetary penalties but any late fees, interest and reasonable attorney fees associated with the assessment lien may be included in the lien.
A March 6, 2010 blog entry from the HOA Institute in Arizona, a group of HOA attorneys, says a lien can be placed on a home for monetary fees alone but it's a long process.
The article says, "if a homeowner fails to maintain his yard, the association must notify the homeowner of the violation, give the homeowner a chance to contest the violation, sue the homeowner for the unresolved violation, and win the lawsuit on its merits before the association can place a lien on that home for the CC&R violation."
Most HOAs in Ahwatukee say that they try everything they can to avoid having to foreclose on a home. In many cases it's just not worth it.
"A lot of associations now-a-days are not foreclosing as much as they used to because there's no equity in the home," said Clint Goodman of Goodman Law Firm, who represents HOAs in the foreclosure process. "If there's equity in the home foreclosure might make sense. If there's no equity in the home the bank would just step in and say, ‘Hey, thanks for doing this.' And then they'd have to pay the bank their lien."
Chad Blostone, a board member of The Foothills HOA says in five years he has never seen an HOA foreclosure in their HOA for the same reason.
"I believe it's extremely rare for an HOA to foreclose in Arizona," Blostone said. "The HOA's lien is subordinate to any lenders and property taxes. There has to be equity in the property beyond the superior lien rights for it even to be worthwhile for an HOA to foreclose."
Karen Young, assistant general manager for the Ahwatukee Board of Management, which oversees more than 54 planned communities in the area, says though it has the power to, ABM does not consider foreclosing.
They say they'd rather work with the homeowner to get the money taken care of.
"I really think it'd be a last resort for any association for numerous reasons," Young said. "It is a big deal. It certainly should not happen without due process and numerous notifications, in my opinion."
Uriell believes this entire issue could have been taken care of with a phone call or with a little more responsibility from the HOA's attorneys, but he admits he was caught up taking care of family business and should have paid attention sooner.
Now he has to deal with the process of getting his home back. Each step has a fee of its own. Once Uriell goes through everything, which could take about six months, it may end up costing him close to $10,000.
"It's just going to be one huge amount of time and headache," Uriell said. "I just want to settle this. It's just taking an incredible amount of time and there's no guarantee that I'll ever recoup these fees."
For homeowners to protect themselves from anything like this Young suggests staying in close contact with your HOA to work it out before a lawsuit is filed. She says she has many homeowners who are doing that right now.
"Call, make reasonable payment arrangements, and if you can't do it, call them back," Young said. "The homeowner has to realize that it's as much or more their responsibility to contact their creditor, whoever it is. I think most places are very reasonable with consideration of the economy. Communication is key."
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