How to Catch Up on Overdue HOA and Condo Association Fees

Falling behind on HOA or condo association fees can be stressful. You may feel embarrassed or ashamed, and worry about losing your home. But don’t panic! There are ways to get caught up.

First, take a deep breath. Review your HOA or condo association’s governing documents and bylaws. Make sure the fees they say you owe are accurate. Ask the HOA or property manager for an account ledger showing charges and payments. Review it closely.

If the amount due seems wrong, ask questions. Politely point out any errors you find. Provide proof like cancelled checks or bank statements. If they won’t work with you, consult a real estate lawyer. You may be able to fight improper fees.

Contact the HOA or Condo Association

Once you’ve confirmed the amount owed, contact the HOA or condo association. Explain your situation calmly and honestly. Ask if they’ll let you pay the overdue balance in installments over several months. Offer to sign a payment plan agreement.

Many associations will work with homeowners, as long as you show good faith. They want to avoid the costs of hiring lawyers and going to court. Offering a payment plan shows you’re serious about getting caught up.

If the association won’t take payments, ask if they’ll accept a lump-sum settlement for less than the full amount due. For example, see if they’ll take 80% of the balance if you pay it right away. They may agree to this if the alternative is lengthy legal action.

Borrow from Friends or Family

If the association won’t make a deal, your next step is coming up with the cash. Borrow from friends or family members if you can. Explain it’s to save your home from foreclosure. Offer to sign a promissory note agreeing to repay the loan.

Make sure the person lending understands this is a gift if you can’t pay it back. They shouldn’t give you money they can’t afford to lose. Be very careful borrowing from retirement accounts like a 401k. You may face taxes and penalties.

Take Out a Loan

If borrowing from people you know isn’t possible, look into getting a loan from a bank, credit union or online lender. This can be difficult if your credit isn’t great.

A home equity loan or line of credit uses your home’s equity as collateral, so may offer better terms. But this puts your house at risk if you default. A personal loan or credit cards have high rates but don’t put your home on the line.

Compare multiple lenders to get the lowest rate possible. Online marketplace sites let you check rates from many lenders at once. Avoid payday and car title loans, which charge astronomical interest.

Use Your Retirement Savings

Withdrawing from retirement funds like a 401k or IRA should be a last resort. You’ll pay income tax on distributions, plus a 10% early withdrawal penalty if you’re under age 59 1/2.

But it’s an option if you’ve run out of others. Try to minimize taxes by only withdrawing the exact amount due in HOA fees. You may be able to avoid the penalty if you set up substantially equal periodic payments.

Be aware this will seriously hurt your retirement savings. Try to pay the money back into your retirement account within 3-5 years if possible.

Hardship Programs

Some HOAs and condo associations offer hardship assistance programs. These help owners who are going through temporary financial difficulties. Ask if yours has such a program.

To qualify, you’ll need to show hardship wasn’t caused by financial irresponsibility. For example, job loss, divorce, illness or disability. They may require proof like bank statements, hardship letter, etc.

Benefits vary but may include waiving late fees, creating payment plans, or even covering some fees temporarily. This can provide breathing room until you get back on your feet.

Rent Out Rooms

Renting out a spare room is a time-tested way to raise money fast. Clear out the clutter and freshen up with paint. List the room on sites like Airbnb, Craigslist or Roomster.

Screen potential renters thoroughly, including credit and background checks. Require references. Draft a rental agreement stating rent, security deposit, house rules, etc. Set rent a little below market rate to get it rented quickly.

Having a roommate is not always ideal. But desperate times call for desperate measures. Tell them it’s a temporary arrangement until you catch up on bills.

Delinquent Accounts

If you just can’t get caught up no matter what, the account will become delinquent. This means you’re seriously behind – usually at least 90 days overdue.

The HOA or condo association will likely turn the account over to a collection agency at this point. Expect harassing calls and letters demanding payment.

Don’t ignore the collections agency completely. But don’t make any promises you can’t keep either. Get professional help from a nonprofit credit counselor or attorney.

Liens

If you remain delinquent, the next step is the HOA or condo association can place a lien on your property. The lien amount will be the past-due balance plus legal fees.

Liens can damage your credit score and make it harder to refinance your mortgage or sell your home. But they don’t force you out right away.

In some cases, you may be able to negotiate with the HOA’s attorneys to remove the lien, such as by agreeing to a payment plan. This usually requires paying at least some of the amount due.

Foreclosure

If you can’t pay off the lien, the HOA or condo association may ultimately foreclose on your home. But foreclosure is a last resort since it’s costly for the association.

To start foreclosure, the HOA must file a lawsuit against you. You will get a notice of default giving you a chance to respond. If you don’t respond or can’t pay, the court will allow foreclosure.

Foreclosure laws vary by state. A real estate attorney can help you understand the process and options. You may be able to sell your home yourself before the association forecloses.

Bankruptcy

Filing Chapter 13 or Chapter 7 bankruptcy stops collections and foreclosures. It can eliminate or restructure debts, protecting your assets.

Chapter 13 bankruptcy lets you catch up on overdue property charges over 3-5 years. Unpaid fees get rolled into a repayment plan. Chapter 7 wipes out eligible debt, but you must sell the home.

Bankruptcy damages your credit and won’t erase HOA liens in some states. Consider it carefully and talk to a bankruptcy attorney first.

Deed in Lieu of Foreclosure

With a deed in lieu of foreclosure, you voluntarily transfer ownership of your property to the HOA or condo association. This can avoid foreclosure and save you time and money.

Most associations will require trying to sell the home yourself first, then agree to take a deed in lieu if it doesn’t sell. This way, you avoid foreclosure on your record.

Consult a real estate attorney, as you will be surrendering the home. Make sure the HOA agrees in writing to forgive any remaining balance you owe after giving up the deed.

Move Out Before Foreclosure

If all else fails, you may have no choice but to move out before the foreclosure is finalized. This is a last ditch option to avoid having an involuntary foreclosure on your record.

You will still owe any remaining balance not covered by selling the home. The HOA or condo association can pursue you in court for the money.

Make sure you fully understand the consequences before abandoning the property. Consult a real estate attorney before making this difficult decision.

Falling behind on HOA or condo fees happens, but it doesn’t have to lead to foreclosure. Take action early, communicate with the association, and exhaust all options before giving up your home. With perseverance and creativity, you can find a way to catch up.

Good luck!

References

New York HOA and COA Foreclosure Laws | Nolo. https://www.nolo.com/legal-encyclopedia/new-york-hoa-coa-foreclosures.html

I’m Behind in HOA Dues. Can I Negotiate With the HOA to Catch Up? – Nolo. https://www.nolo.com/legal-encyclopedia/i-am-behind-hoa-dues-can-i-negotiate-the-hoa-catch.html

New York HOA Collections – Axela Technologies. https://www.axela-tech.com/blog/local/new-york-hoa-collections/

Behind on your Homeowner or Condo Association dues and cannot catch up? https://www.fight13.com/behind-on-your-homeowner-or-condo-association-dues-and-cannot-catch-up

7 Steps to Properly Account for Late HOA Fees | HOAleader.com. https://www.hoaleader.com/public/7-Steps-to-Properly-Account-for-Late-HOA-Fees.cfm

Best Way to Get Past-Due Condominium Assessment Fees Paid! | Tilchin & Hall PC. https://www.tilchinhall.com/blog/2021/10/best-way-to-get-past-due-condominium-assessment-fees-paid/