Millions of residents across the United States have made the switch from renting to owning homes. Homeownership offers significant advantages that are not available to most renters.
For example, your monthly payments build equity in the property rather than disappear into the landlord’s pockets. Additionally, you typically have more freedom to make changes to the property to customize it to your needs when you own the home.
Many homes fall under the jurisdiction of a homeowner’s association. Homeowner’s associations are legal entities that govern a specific neighborhood or small area with multiple homes. To live in a homeowners association and enjoy its privileges, you must pay HOA fees.
HOA fees are usually paid monthly or quarterly, along with your mortgage, interest, insurance, and other ongoing expenses.
What are HOA Dues?
HOA dues are the payments you make to be part of the homeowners association. You may pay HOA dues monthly, quarterly, or even annually. The purpose of paying HOA dues is to fund services for the neighborhood or community within the jurisdiction of the association.
It may fund community maintenance projects like paved roads, sidewalk repairs, park upkeep, snow removal, or landscaping costs. HOA fees also cover other neighborhood services, such as security measures or trash removal.
These monthly expenses also fund community amenities, such as a community pool, a park, a gym, tennis courts, or a concierge service that is only available to association residents.
When you live in an HOA community, you agree to abide by the regulations and pay the HOA fees to access these services and amenities. These rules help maintain high property values and a desirable community.
Legal Basis for HOA Dues
When you join an HOA community, you must abide by the HOA’s governing documents, which will likely include covenants, conditions, and restrictions (CC&Rs). These documents guarantee consistency within the HOA community, as everyone must follow the same rules regarding their homes and properties.
As part of these governing documents, you agree to pay those HOA fees on time. Failing to make on-time payments may lead to fines from the homeowners association, liens on your property, and even a foreclosure.
Legitimate Reasons for Challenging HOA Dues
In general, you can’t avoid paying HOA fees. If you want to own your home in that area, you have to follow community rules and pay the fees to earn that privilege. Even a few late payments can cause issues for your status as a member.
However, there are some circumstances where you could qualify for a temporary reduction or even challenge the cost of HOA fees. Let’s discuss some exceptions that could reduce HOA fees in a homeowners association.
Financial Hardship
HOA board members typically make decisions about paying HOA fees. One exception that many associations will allow is financial hardship.
Many HOA boards offer homeowners experiencing financial difficulties a temporary reduction in their HOA fees. You will likely need to present your case to the board and convince them that your financial struggles are real and can be overcome.
You can negotiate for reduced costs with the HOA board or even be granted complete relief from your dues for a few months. This arrangement depends on the type of community you live in, the HOA rules, and the personality of the individual board members. Some associations are more forgiving in these situations, while others have high standards for all members.
Breach of Contract by the HOA
While HOA law is confusing for many homeowners, one clear example of poor operations is a breach of contract. Read the HOA agreement carefully before you sign it. Once you understand the various CC&Rs, you know what to expect of the association.
If the association fails to meet its obligations as outlined in this legal document, you may have grounds for not paying HOA dues. For example, if the HOA agrees to remove snow from areas of the neighborhood and it fails to do so, this could represent a breach of contract. You can attempt to work this issue out with the HOA directly by expressing your complaint.
If this fails, and they will not accept unpaid dues, you could consider legal action against the association for not upholding its obligations.
Disputes Over Fees or Assessments
Monthly or quarterly HOA dues are not the only payments that you might make to the association. Sometimes, there are extra assessments levied against homeowners for special projects or as punishments for violating the HOA’s rules.
If you believe these special assessments are unjust, or if your HOA dues suddenly increase dramatically, you could challenge these fees. To successfully challenge improper HOA dues or assessments, you should always read the contract agreement first.
Draft a letter to the HOA board detailing your complaint and provide evidence of the wrongdoing. You can ask to speak at the next HOA meeting to plead your case. Most associations have an appeals process, so you can pursue that route if you are dissatisfied with the initial answer.
Finally, if you are out of options and still believe the HOA fees are unjust, you can consider arbitration, mediation, or a civil lawsuit as a last resort.
Strategies for Reducing or Avoiding HOA Dues
Residential properties in HOA communities are often in high demand. Many homeowners can benefit from amenities like swimming pools and services like garbage removal. However, HOA dues can feel like a heavy burden that prevents many buyers from looking for homes in associations.
It is essential to be an active participant in HOA meetings to voice your concerns and influence decisions regarding fees or assessments. If you purchase a home in an HOA and want to reduce your fees, here are a few strategies you can try.
Negotiating with the HOA Board
Your first course of action when navigating HOA dues should involve communication with the HOA board. If you are close with a specific HOA board member, raise your concerns with them and ask how to proceed with a request.
For example, if you are facing financial hardship, speak with the board about a temporary relief plan or reduced fees for a few months until you are back on your feet. If you have a good relationship with the board and engage positively, your request is more likely to be granted.
If there are any disputes, you should also prioritize communication. Instead of ranting at the board members in an angry email, approach them with your concerns professionally by drafting a letter or requesting a few moments to speak at the next meeting. The more combative you are when you bring up the issue, the less likely your negotiation will succeed.
Requesting a Payment Plan
A payment plan is a great alternative to paying full HOA dues. If you missed a payment or have a late HOA fee, you can work out a schedule to pay these fees over an agreed-upon period. This plan will ensure the HOA receives the money it owes while lessening the homeowner’s financial burden.
You can request a payment plan by writing a letter to the board explaining your circumstances and detailing the timeline for your payments. A written document will demonstrate your commitment to paying the overdue fees, making the board more likely to accept your request.
Legal Options for Challenging HOA Dues
If a major dispute arises with the association, whether it is a failure to provide services the HOA fees cover or an improper assessment, you could pursue legal action. There are several legal options for resolving your dispute if the board is not receptive to your wishes.
Dispute Resolution Mechanisms
You can resolve a dispute with your HOA in several ways that do not involve lawsuits. Mediation, a common strategy for these issues, simply involves a third-party meeting with the disputing individuals to reach a compromise.
Arbitration is a little riskier for the homeowner, especially if the homeowners association is in charge of appointing the arbitrator. In this resolution method, the two sides present their arguments, and the arbitrator decides on the solution.
Sometimes, arbitrators have a vested interest in favoring their clients (the HOAs) for future business, so their ruling could be imbalanced. Both methods can work, but make sure you understand these processes before committing to a resolution method.
Litigation as a Last Resort
Lawsuits against homeowners associations should be a last resort for your dispute. Although you can hire a lawyer who will offer legal advice and help you build a strong case, the upfront fees and stress are rarely worth the trouble.
There are numerous unnecessary expenses and complexities that you won’t understand until too late, so the challenges of the process may outweigh the benefits of winning a lawsuit. However, if you believe you are being unfairly treated and other resolution methods are unsuccessful, litigation could be a solution.
Consequences of Non-Payment of HOA Dues
Not paying HOA dues will have serious consequences for the homeowner. Even if your reasons are justifiable, you are at the mercy of the association for whether or not you will owe penalties. Here are some ways HOAs can punish homeowners for not paying HOA dues.
Late Fees and Penalties
The simplest consequence of non-payment is an increased fee or fine. There may be a monetary penalty you can pay to have the late payment forgiven. Some HOAs may attach additional charges to your next HOA payment.
The association is well within its rights to charge interest on the owed amount as long as this is laid out in the contract you signed. Late fees, interest charges, and collection costs can all be used to punish you for failing to pay HOA fees.
Liens and Foreclosure
Unpaid fees could also lead to a lien being placed on your property. An HOA lien is a legal claim against your property that gives the association the right to collect unpaid dues and fees. Usually, if you pay the owed amount plus interest and late payments, the lien will be canceled.
However, if you do not satisfy the terms of the lien, the HOA could initiate foreclosure and take possession of your home.
Damage to Credit Score
Whether you are facing high HOA fees and cannot afford them or are seeking strategies for cost savings, unpaid HOA fees should be a last resort.
Even if you make up for the late payment and cover all extra fees, the missed payment could hurt your credit score, which may take months to repair. This setback will make it harder to access competitive interest rates when you borrow loans.
Consider Selling to a Cash Home Buyer
One way you can avoid paying missed HOA dues and HOA liens is by selling your house to a cash home buyer. At A-List Properties, we are prepared to make a fair cash offer on your home in any condition. Even if you owe money to the HOA for missed payments, we will cover those costs with our offer.
Selling to A-List Properties is easy. Once you accept our offer, you can complete the transaction in 14 days or less. Call us today at 972-526-7042 or fill out the online form to request a quote for your property.
Zach Shelley
Zach Shelley is a seasoned real estate investor with a diverse network spanning across the nation. As the founder of his own real estate venture, Zach is committed to offering innovative solutions to homeowners facing various real estate challenges.. Through his dedication and strategic approach, Zach continues to make a significant impact in the real estate industry, providing homeowners with alternative pathways to navigate their property transactions.
