Dr. HOA,

I have been responsible for paying the HOA dues on my mother’s condo and, admittedly, I fell behind. She called last night and said she received two certified letters in the mail threatening foreclosure.

The management company is saying if I don’t bring $3,200 dollars to them by the end of the year, they will foreclose on the property.

Please tell me what I can do to stop this and from forcing us to either try taking out a loan somewhere, (I have no credit) or possibly borrowing against my retirement.  — L. Butler

Hello L. Butler,

I am sorry to hear of your situation. Taking a proactive approach to try to resolve your delinquent account is a positive initial step.

Associations in California have the authority to foreclose on a property after an account has been delinquent for one year or the delinquent amount exceeds $1,800.

That said, I always encourage associations to utilize foreclosure as an absolute last resort for several reasons: 1) It is expensive for the association; and 2) It is inappropriate if the owner is showing good faith and trying to resolve the debt.

Unfortunately, if the owner is nonresponsive, uncooperative or simply unable to make good on the debt, there is sometimes no other option and foreclosure becomes necessary.

To provide a little insight into the foreclosure process, there are two different types of foreclosure options afforded to homeowners associations: judicial foreclosure and nonjudicial foreclosure.

Depending on which type of foreclosure the association is pursuing, it may have the ability to not only take possession of your property, but also obtain a monetary judgment against you, granting it the right to lien your personal financial accounts and garnish any wages.

If the association is pursuing a nonjudicial foreclosure, it is looking to foreclose on the property, take possession and either try to recuperate the delinquent amount through renting out the property or simply looking to get a new owner in the home who will pay the monthly  dues.

Associations pursuing judicial foreclosure are seeking to obtain a foreclosure judgment and a monetary judgment, and if successful, must decide which they prefer to obtain. They must select one or the other, not both.

The best advice I can give an owner who would like to delay and potentially cease the foreclosure process is to propose a payment plan in writing to the board of directors and obtain written approval of the proposed plan.

A board-approved payment plan will benefit you in two ways: 1) typically it will stop the late fees and interest, and 2) it will most likely delay the foreclosure process.

I would suggest proposing a good faith down payment to prove that you are serious about paying off the debt. Ideally, boards are looking for down payments ranging from 25 to 50 percent of the delinquent balance due.

At the same time, propose a set monthly payment amount in excess of the regular dues amount that will bring the account current within the next 12 months.

For instance, someone owing $3,200 would ideally propose a down payment of $1,400 and $150 per month in addition to the regular monthly assessment.

When proposing a payment plan, be aggressive but realistic. If you default on the payment plan, the association can immediately proceed with the foreclosure action, and it will be far less likely to approve another payment plan.

It is essential to communicate with the members of the board of directors. They are the ones who ultimately make the decisions, not the management company. If you have an approved payment plan, and there’s a chance that you may default, proactively reach out to your board and propose a revised payment plan.

Most boards are sympathetic and willing to work with homeowners so long as the owners show they are committed to paying off the delinquent balance.

Lastly, regarding filing for bankruptcy, although I am not a bankruptcy attorney, it is my understanding that this too would stop the foreclosure process, but a bankruptcy attorney is going to most likely cost you as much (if not more) than settling the debt with the association.

If you have a credit card, and your association’s management company accepts this form of payment, look to make a good-faith down payment against the delinquent amount on your credit card.

If borrowing against your retirement is an option, I would look to take advantage of this, too.

Associations have the legal right to foreclose on properties, but if you show good faith, propose a reasonable payment plan and adhere to that plan I am confident you can avoid foreclosure

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