Crazy HOA Lien - Any Advice is much appreciated!

[Rohan Siddaraj]

Hey guys, I have a house under contract in GA set to close next week. The house has a HOA lien. In March 2019, it was around 7.5k(fines)+2.5k(attorney fees), today it is right under $60k. I'm working on writing a letter to HOA attorney requesting the fee be dropped to around the 2019 amount. Also the violations are very simple fixes.

Does anyone have any experiece with negotiating with HOA attorneys? I have written a letter out, can anyone tell me if this sounds good or if you would add/subtract anything from it?

"Hello (HOA Attorney),

My name is Rohan and I was looking to purchase (address) from Mr.(owner). I’m purchasing the property from them to rehab/renovate the property as it needs a lot of work and they are not able to repair the property themselves. They ultimately just want to get out of it as they are going through hard times right now with job loss due to the pandemic and being forced to move into their mother’s house. My closing attorney ran the title and the HOA lien came back at right around $60,000.

The current violations are:

• Mildew on the siding
• Weeds in lawn
• Weeds in landscape beds
• Tree stump that needs to be ground down
• Garbage can being visible from street
• Mailbox repair and repaint
• Debris (gas can and cooler) removal from the property
• Damage to fence

I understand the current owners have neglected to address the HOA guidelines for the property, however, if I were to purchase the property, all of the current violations would be fixed. However, with the fines being $60,000, it would be impossible for them to sell their house as there is not enough equity due to the repairs the house needs.

On March 26th, there was a letter sent from (HOA Attorneys) to Mr.(owner) showing the past due assessments being $7,413.75. Can we get together on a phone call to see if we could come to an agreement around that number? Mr.(owner) would be able to sell his house, move into their mother’s, the lien would get paid off, I would resolve all of the violations and renovate the house, allowing a new family to move in and increase the value of the neighborhood."

[Matt Devincenzo]

I'm not personally a fan of the way your letter is structured...it's too wordy about the seller which I don't think they really care too much about...and doesn't provide the right reasoning and a real resolution...just my opinion. 

I'd approach from a stronger position. I like that you lay out the actual violations, but I think you need to lay out the actual costs to the HOA as well. Generally with municipal code violations many areas will be more inclined to waive 'administrative fines' than their hard costs. I think you should pursue the same angle here. i.e. an accounting shows that the actual costs (attorney's fees, mailings, any actual repairs) are $XXX. Take that number and add a general 'annoyance' fee i.e. $5K or whatever you think would get agreement and then present that as your 'settlement offer'. I'd also offer that $10K or some significant amount would be held in escrow to be paid out if the repairs are not completed within 30 days of you taking ownership.

"Hello (HOA Attorney),

My name is Rohan and I was looking to purchase (address) from Mr.(owner). My closing attorney ran the title and the HOA lien came back at right around $60,000. 

The current violations are:

• Mildew on the siding
• Weeds in lawn
• Weeds in landscape beds
• Tree stump that needs to be ground down
• Garbage can being visible from street
• Mailbox repair and repaint
• Debris (gas can and cooler) removal from the property
• Damage to fence

In reviewing an accounting of the charges it appears that $XXX in attorney's fees and $XXX in repairs are the actual costs the HOA has incurred due to these issues. An additional $XXX in fees have accrued as a daily fine which represents the majority of the lien. Unfortunately this large of a cost would preclude me from being able to purchase and repair the home and results in the home being underwater in value by ~$40K (or whatever that number should be). 

I would propose a reduced settlement on this lien amount of $XXX to cover all of the costs the HOA has incurred as well as $4,000 fine. In addition $10,000 will be placed in escrow with XXX title at closing to be disbursed to HOA if the repairs are not completed within 30 days of my taking ownership of the property. If this proposal is acceptable please let me know at your earliest opportunity so I can ensure the appropriate steps are taken to allow for us to close on this purchase. 

Thank You

Rohan"