Skip to content

Board Member FAQ: Collecting HOA Dues After a Sale

As a community association board member, you hope that your neighbors stay in your community for years. But sometimes, circumstances cause a member to sell a home and leave. If that member is behind on dues or assessments, that can leave your community holding the debt. You need to know where to turn to collect after the sale.

Members leave community associations for all kinds of reasons. They may have to relocate for a job. Maybe their families are growing and they need to expand. Or maybe they are hoping to avoid fees. When a sale happens while dues are outstanding, it can cause problems for a community association.

Collecting from the Selling Homeowner

If a sale is pending when a person is behind on their HOA dues, you may want to try to collect from the homeowner before he or she goes to closing. During the sales process, a title insurance company will investigate the state of any unpaid assessments. If there are unpaid dues, it could cause a buyer to renegotiate or even walk away from the sale. Because of this, a selling homeowner may be willing to resolve an outstanding claim to avoid problems during closing. This can sometimes be challenging if the resident moves out of state. The community association is best off working with a collections specialist to collect unpaid HOA dues before the sale is final.

Collecting from Co-Owners

If there is more than one person living in a home in your neighborhood, it could give you more options to collect your HOA assessment. Anyone who co-owns the property will most likely be covered by your community association’s rules. If you cannot collect from one owner, you can pursue another. This most often comes up with vacation properties, or in the case of divorce. When co-owners separate, they may agree on who is responsible to pay the debt. But if collection efforts with that party fall through, you may still be allowed to pursue a claim against the co-owner as well.

Collecting on an HOA Lien

As the collections process progresses, your community association may also have a claim against the property sold. Depending on your community association bylaws and local laws, unpaid assessments may create a lien on the home or condo. A lien protects your community association from the risk of unpaid assessments by filing a claim against the property. If a lien has been issued against a home or condo, the overdue assessment will be paid out of the proceeds of the sale of that property. Usually the seller’s mortgage and any home loans will be paid first. But a lien ensures that the community association gets its money before the seller is paid.

A sale can complicate the collections process and leave your community association holding an empty debt. Careful planning and proactive collections practices can make sure your assessments get paid, even after a sale. If your community association is facing collections problems, or you wish to have a plan in place in case your community faces an issue, contact Equity Experts to receive an expert’s assistance.

More Insights

Subscribe to Insights

  • This field is for validation purposes and should be left unchanged.

SEE OUR SOFTWARE IN ACTION

Questions? Want to see a live demo customized to your data?
Live Demo