My HOA is suing me for back dues? Should I just foreclose on the house?

by oliver on September 30, 2010

Question:

My HOA is suing me for back dues? Should I just foreclose on the house?

I took out a 100% mortgage for a place about 2 years ago at a condo conversion. I thought everything was great, until the rest of the units never sold. The owner started renting them out, and we didn’t have enough people to switch the HOA over to the owners. I stopped paying the HOA because they weren’t enforcing the rules: renters throw trash around, play loud music, deal dugs, and park in other people spots. There’s been break ins and I’ve had the cops knock on my door asking if I’ve seen my neighbor because her door was found kicked in, blown off the hinges and wide open.

I bought the unit for $150k and pay about $1200 a month in mortgage. The renters pay $650.00. My property dropped $50k in the first year, now its worth $108,000. I had a lien on my property for 6 months of dues, $700. But they added attorney’s fees, and now its $1250. Now they’re trying to sue me and want $3000.00.

The unit has gone to hell. The appliances I thought were new turned out to be used. The washing machine doesn’t work correctly, the AC unit has blown out and needed to be repaired by me, the property owner doesn’t pay the water and has been turned off twice (but has been turned back on).

I want to get the hell of out this place. I figure I’m spending over $12000 to live here, and if i just moved into an apartment and saved the money, in 10 years, I could have $60k saved versus paying mortgage. If i stay here for 10 years, I can’t sell my unit for $210,000 and get $60k in equity (would have to sell over $200 a sf).

I’m starting to struggle to make the payments now. My mortgage is due on the 1st, but I end up paying on the 15th and have a $50 late fee.

I have $12000 in credit cards and loans that I’m trying to pay back, because I’ve starting living on credit because my disposable income has dropped to 0 and I’ve been using it to buy groceries, gas, house repairs, car repairs and such.

I’ve been good on making all the payments on credit cards and stuff on time, so I don’t have any past due debt. Im paying more than the minimum for my credit cards, and hope to have them paid off within 3 years, but I can pay them way faster if I didn’t have the house.

Is it worth it just dump the house and move on with my life? I’ve understood what everyone says about “being more responsible, biting off more than you can chew..etc,” but take this for what it is: a bad business decision. This property is costing me money and its not worth my time or money to keep it – Leaving ethics and emotion out of it, is is worthwhile long term and financially to accept a foreclosure and save the money and try again in 5-10 years ?( I’m 23 now, bought the house at 21). I have no money vested into this place, and its caused me nothing but problems since I moved in..literally, my realtor said here’s the keys good luck. Never heard from them ever again. The escrow company never gave me back my earnest deposit and lost it, and the HOA doesn’t do anything, but still wants money.

What about the HOA dues? Should I file bankruptcy and just start my life fresh? I don’t have any other property, and I don’t have any money for them to take – I’m basically living paycheck to paycheck, and don’t see any way out for at least 30 years (or until the mortgage is gone).

I don’t want to lose my car that I’m paying for, and I can’t afford to pay $20000 in debt plus my regular living expenses (about $600 a month)

Answer:

You cannot foreclose on your own house because the only one who can do that is the one who made a loan on the house and has a contract to repossess the property if the payments are not made on time. The process wherein the lender takes over the house when the homeowner is behind his payments is called foreclosure. If your house is foreclosed on by the lender or is sold to the public thru a foreclosure sale, there will be a transfer of property rights from you to the new owner or to your lender. Until the time the rights to ownership is transferred, you are still required to pay your HOA dues.

If in case you filed for bankruptcy, you will still face the issue of your HOA payments after your discharge. Therefore, you cannot get away with your HOA dues unless you pay for them.

To aovid these troubles, you have to seek legal options to surrender the property and stop the collection of your HOA dues. If you do not do this, your HOA dues may continue to increase and accumulate over time. Your attorney can include your back dues in your filing for bankruptcy however, it requires a very strict compliance of legal rules as well as formalities.

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