HOAs can foreclose on homeowner who fails to pay assessments

Q: I was at a gathering recently and someone said an owner could lose her home because of a homeowners association’s legal maneuvers. The same person said that a HOA in Nevada is so powerful that it can, in effect, force a home’s sale.

I’m not sure whether or not this person (whom I’d just met at the party) is speaking reliably. Therefore, I’m quite confused.

Assuming the HOA has reasons (liens on unpaid dues, unpaid assessed penalties or whatever else is unpaid), is it true that the HOA could force a home’s sale even at a losing proposition for the homeowner; i.e., cents to the dollar?

Could this happen if the home has a mortgage with a bank or lender? Could this happen if the home was bought “free and clear,” no mortgage?

A: As recent articles in this newspaper have pointed out, an association can foreclose on a homeowner who does not pay assessments.

There are stringent state laws describing how an association can foreclose.

First would come a 60-day period in which the association would send the delinquent homeowner reminder notices before any legal action can be taken. Foreclosure must wait until the 61st day to begin; the association would send a specific, state-law-required package to the delinquent homeowner, laying out that homeowner’s options. If the homeowner does not arrange to pay delinquent assessments or seek a payment schedule, then the association will take the next step.

At this point, most associations contract with a collection agency that specializes in working with homeowner associations. Again, the law is explicit about how to notify the homeowner on foreclosure’s stages, from intent to lien, notice of default and notice of sale. At each notification stage, there are set time periods before the next foreclosure step can come.

You must remember that when a buyer purchases a home within an association, the governing documents are recorded against the deed of the house.

This lets the association initiate foreclosure if necessary. Also, the buyer would receive a copy of a required disclosure document, per Nevada Revised Statutes 116.41095, that specifically informs her of obligations to the association and actions an association can initiate against her if she fails to comply with the governing documents. One such action would be foreclosure, item No. 4 on the disclosure form.

An association cannot foreclose on fines unless it was nonpayment for a health, safety and welfare violation. In this case, the homeowner would have to attend a hearing before collections could occur.

Yes, an association can foreclose upon a house even if there is a mortgage or no mortgage on the home. But, again, there are very specific procedures.

Barbara Holland, certified property manager, broker and supervisory certifiedassociation manager, is president and owner of H&L Realty and Management Co. Questions may be sent to the Association Q&A, P.O. Box 7440, Las Vegas, NV 89125. Fax is 702-385-3759, email is support@hlrealty.com.