In law school they teach students to think of property ownership as a “bundle of sticks.” A weird metaphor, but one that makes sense after a bit of thought. When pioneers “staked a claim” to land, in theory they claimed all of the land between their stakes from the sky to the center of the earth and every right to do what they wanted with the land. Over time, we have exchanged certain property rights (sticks) for other conveniences. For example, by purchasing land in a city you might be giving up the right to let your grass grow long, to have loud parties, and to keep vehicles in your yard in exchange for the sidewalks to be paved and to hook up to city water and sewage. You therefore, have fewer sticks in your bundle of property ownership.
When a home falls into foreclosure, quite often the homeowner quits paying home owner’s association (HOA) dues long before a bank takes over the property and long before a new owner resumes paying regular monthly dues. What happens to the obligation to pay HOA dues when a home is foreclosed?
Many small to mid-size home owners associations (“HOAs”) are run by a board made of a few active members. It can be a thankless job, especially when the HOA cannot afford to pay an outside management company to be responsible for the day-to-day management of the HOA. The question that always arises is how to handle the member that has stopped paying assessment dues. In a small HOA, delinquency of even a few hundred dollars can be a large percentage of the HOA’s budget. Here are my tips on how to handle delinquent members.