Tuesday, May 6, 2014

Buyer Beware - You Are About To Be A HOA Victim

NOTICE:  New out-of-state home buyers -- welcome to Florida and please turn over your new home to the HOA.

This has been going on for a while, but the number of owners contacting me because they have been victimized is increasing at a steady pace

Here's the scenario:

-  You sign a purchase agreement to buy a home in a HOA
-  Your closing documents have charges to pre-pay the HOA; sometimes for a couple of months,
    sometimes til the end of the year
-  You expect to get a coupon book to pay your assessments; sometimes you do, sometimes you don't
-  You receive an intent to lien notice for past due assessments despite not getting a coupon book or even
    paying your assessments
- You call the property management firm who tells you a) the bookkeeping hasn't posted all the payments
   b) it's not a mistake on their part and just send the money and they will fix it or c) they didn't receive your
   payment but send it in and they will take care of it
-  The property management firm doesn't tell you that you have incurred interest and late fees and maybe
   even attorneys' fees and any payment goes to the fees first and assessments last so you will continue to
   be past due
- The issue then snowballs into a dispute that involves the HOA attorney, who liens your house and then
   sends a notice to foreclose
-  Every phone call, email or letter to the HOA attorney generates more legal fees

What's really going on:

-  Unscrupulous property managers and attorneys work together to generate billable hours for both
-  You may have pre-paid assessments but the management company did not properly credit them
-  You were given an incorrect amount
-  Your payment was "lost" because there is no way to prove you did send it and a payment dispute
    means more money for the HOA manager and attorney
-  You are told they will fix the problem while they are really preparing a lawsuit to foreclose

The problem:

There is no defense to non-payment of assessments unless you can prove you did actually pay them and the HOA made a mistake, which is rare to have the proof necessary for this defense.

How to avoid the problem:

Ask you real estate agent or title company the name and address to send payments.  The title company should get this from the estoppel request they are required to send to the HOA.  Pay your assessments in advance at least until the first of the new year so you can be certain you get a coupon book.  Use a bill pay service so you have proof of processing and delivery of the payment.

Of course the best solution is to not buy a home with a HOA.


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