Just because you've been making your mortgage payments doesn't mean
you're in the clear on your house. If you live in a condominium and
fall behind on home owner's association fees, your neighbors have the
right to foreclose on your property.
That reality is almost
always written into the purchase contract: When you buy a home in a condo association, you agree to abide by the condo rules -- one of the most important of
which is paying the monthly condo fees.
Without the threat of
foreclosure, HOA dues would be optional, leaving homeowners who do pay
with the responsibility for covering their neighbors' share of common
charges like water, insurance, landscaping, and maintenance.
The Associated Press reports that
HOA-induced foreclosures are rising across the country as job losses
continue and home owners are forced to choose between their mortgages
and their dues.
But if you're a strapped condo owner, there's a
bit of good news. It's a cliche that banks don't want your house and
would rather work with you to help you keep it, but the home owner
association really doesn't want it.
Foreclosures depress
property values. Just to spitball some numbers, let's say you're $5,000
behind on your dues and there are 100 units in your complex. If your
foreclosure would lead to a $2,000 decline in the value of each of your
neighbor's units, that's a fate they're going to want to avoid.
So
it's always worth talking to your HOA board at the first sign of
trouble and working out a payment plan that allows you to keep your
unit and gets them paid at some point. It's better for everyone that
way, and foreclosing on a home to recoup a few thousand dollars when
the foreclosure costs every unit owner thousands in equity is just bad
business.
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