Stopping HOA Foreclosure

Being involved in a foreclosure court case can be very confusing.

We had heard from many homeowners that they are being contacted by other attorneys. This is just adding to the confusion. In many cases, these attorneys are looking to do one of two things. First, they may propose a bankruptcy. While a bankruptcy could put an automatic stay on the foreclosure process and allow the bankruptcy attorney to negotiate the total amount owed, consider how much the bankruptcy attorney is going to cost and how much it would cost to have your credit impacted by opening a bankruptcy.  We are not bankruptcy attorneys. In most instances when we have talked to them, they have shared with us that if the only reason you are opening a bankruptcy is to stop a foreclosure, then opening a bankruptcy is probably not your best option because of the long-term impact.

Other attorneys may be looking to fit the case for you. Although they may be able to get some of your fees reduced, keep in mind that you will then have to pay the attorney that is fighting for you in addition to the HOA dues, fees, and the HOA's attorney. The HOAs hire attorneys who specialize in fighting HOA foreclosures for the HOA. These attorneys know how to make it sure everything is set up properly so that the homeowner is not able to fight the HOA in court.

The first thing to do after you have been summoned is reach out to the foreclosing attorney. This is the attorney listed in the top left-hand corner of the summons paperwork. Most people start off calling the attorney's office three or four times a week. After the first week of the attorney not getting back to them, people will start calling two to three times a day in order to open the lines of communication with the attorney and help the attorney to understand that you want to solve the issue..

When you are on the phone with the attorney, proposed the idea of a payment plan. As long as the total dollar amount owed is not too high most law offices and HOAs will approve a payment plan. Increase your chances of approval by also proposing a down payment. Be aware, most law firms are adding $3,000 to $5,000 on top of what is owed to the HOA to account for the attorney fees. 

Once you and the attorney have come to an agreement on the payment plan, the attorney still needs to propose the payment plan to the HOA for final approval. Depending on when the HOA meets, this process could take several weeks to several months. Payment plans are typically approved during board meetings which can happen bi-weekly, monthly, or quarterly depending on the HOA.

Once the payment plan has been approved, the case history will show a stipulated judgment. This stipulated judgment will hold the foreclosure case open until the total dollar amount is satisfied. This means that if you are on a payment plan and miss a payment, the HOA can very easily continue to foreclose without having to open a whole new court case.

If after talking to the HOA attorney, if the dollar amount or a payment plan does not work for you, the next option would be to look at selling the property before the HOA forecloses. We fully realize this is not ideal. The simple fact is, if the property goes all the way through the foreclosure process to a sheriff sale, it will be sold. 

You will have 6 months to redeem the property. Redeeming the property means you pay whatever the buyer paid at the sheriff sale plus interest. Homeowners who are unable to pay the HOA to stop the foreclosure, will most likely be less able to redeem the property because the dollar amount will be much higher. There is a way to get excess funds from the sheriff sale, but that would involve hiring an attorney to open a court case to have those funds released months after the auction.

If you owe the HOA an unreasonable amount or are unable to keep up with a payment plan, being proactive about your need to sell can save you time in court, which also will save you court fees.