Do Homeowners Have to Pay Assessments Accruing During Foreclosure?
Assessments are the personal obligation of an owner during the time of his or her ownership of the property. O.C.G.A. §44-3-232. Thus, up until the time that title actually transfers, the owner is legally obligated for all accruing assessments. Depending on the value of the property compared to the total lien amounts, a purchaser might elect to pay off any delinquent assessments to clear the title to the property. And, under the Georgia Property Owners’ Association Act (GPOAA), the purchaser would be liable for any unpaid assessments. Also, if the property sells, the proceeds will be applied toward the assessments (to the extent the sale price is sufficient to pay off any existing mortgage). If assessments are fully paid off from sale proceeds, the former owner will no longer be liable for the assessments because the assessments will have been paid.
The obligation for members of an HOA to pay the fees assessed by the HOA primarily comes as a contractual obligation which is created by the Covenants, Conditions, and Restrictions (CC&Rs), as well as the Bylaws and Operating Rules of the HOA. The obligation to pay such fees runs with the land/property/condo and as such, the contractual obligation continues on until an HOA property is transferred to the next owner. This article is designed to give members of HOAs basic information concerning HOA Fees and many of the issues that come along with them.
Homeowners’ associations typically are formed to manage any property in the community that is owned communally, as opposed to individually, such as a playground or building hallways. Whether an HOA is made up of a condominium building, townhouses, or single-family homes, the responsibilities generally include the same type of tasks – maintain landscaping, employ property managers, maintain shared private roads or driveways, arrange trash removal, operate a swimming pool, and the like. This article will help you better understand the ins and outs of HOA fees.
A district judge in Florida described community associations as “a little democratic sub-society of necessity.” And, as with federal, state, and local governments, for the “little sub-society” to function, it needs revenue. Association revenue comes in the form of HOA fees paid by homeowners – the functional equivalent of property taxes paid to a local government. An association’s authority to collect HOA fees (or “assessments”) arises from two places:state law and the HOA’s declaration.The declaration is a document recorded in the county land records that serves as the association’s constitution. It grants certain powers to the HOA and imbues homeowners with certain rights and obligations, one of which is the duty to pay assessments.
The right to record liens, and to foreclose on unpaid liens, is perhaps the most powerful tool homeowners’ associations have to enforce assessment obligations. State HOA laws are designed to allow associations to recover unpaid fees without undue effort and expense while protecting homeowners from overly aggressive associations by requiring strict compliance with statutory procedures and ample notice to homeowners.
In 1977, Congress passed the federal Fair Debt Collection Practices Act (the “FDCPA” or “Act”) to prevent abusive, deceptive, and unfair debt collection practices by debt collectors. The act prohibits debt collectors from harassing consumers or using deceptive conduct when attempting to collect a debt. Homeowners or condominium maintenance assessments are subject to the FDCPA, therefore, the association’s debt collectors must follow the law when attempting to collect past due fees from homeowners.
The association, under its documents and local laws, has the authority to charge annual, special, and capital assessments against all owners in the community to pay for the maintenance expenses and improvements to the common areas. The common areas consist of parks, pools, gyms, sidewalks, and any other area in the community, except those portions which lie within the boundaries of the owner's property.
The local statutes and recorded Declaration of Covenants, Conditions, and Restrictions (the "CC&Rs" or "Declaration") serve to establish the association's authority to charge maintenance fees and enforce non-compliance against all owners and properties subject to its authority. The HOA fees cover the costs of the maintenance and repair of the common areas, amenities, and operation of the association to preserve property values.