Associations and Foreclosure

[Steve Dove]

I currently operate lake front vacation rentals, and am facing a potential "special assessment" from the property owners association. They're attempting to assess me and several other property owners that rent their lake houses for an additional $600 per year. This is on top of the dues already collected as required by the by-laws. I've always paid dues and have even made considerable donations past, because 70% of the association does not pay their dues. Our roads need work, and common areas need upkeep, which is why I donate. The board claims that renters cost the association money, but can't provide any specific examples. When challenged, the president was more so focused on the amount of money that we charge for weekly rentals. It's as if the board is trying to go after those that appear to be wealthy, such as myself and several others that rent. Can they do this? Can this actually go to a vote with no actual grounds for the assessment? What happens if I don't pay the special assessment? Can they actually foreclose on my property? It seems as though this is last ditch effort to try to obtain money for operating the association, when the real problem is that the greater majority is not paying. I'd hate for this to turn into some sort of legal battle, but it feels a bit like extortion. If this did go to court, neither party would benefit, as legal fees would just about wipe out the bank account of the association. Looking for some advice here.

[Steve Babiak]

Originally posted by Ned Carey:

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Why aren't they foreclosing on those that don't pay their fees?

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I'll venture a guess here - the HOA liens are not in the most senior lien position, so when the HOA forecloses there is an underlying mortgage (or multiple mortgages) still in place, on what is probably an underwater property ... But I'd bet they try to foreclose on any where the mortgage balance is low enough (or zero).