HOA will not take payment and has placed a lein... Attorneys sending scary letters...

[CA_Owner]

Long time lurker... first time poster.

I followed a lot of the information here on strategic default and have been going through the rounds with Bank of America. In the mean while, I've run into an interesting scenario with my HOA and more importantly the attorneys mu HOA has hired.

In a nutshell, the HOA changed the payment method for dues and I in turn make the necessary adjustments to my automated payment, after several months, due to some bureaucratic issues, my payment began being rejected by the HOA due to addressing the payments to the bank rather than the association. I didn't monitor my payment account (it's set aside for the automatic payment of bills) and didn't notice the dues were not being payed.

My first notification of the issue was when the association turned the matter over to an attorney who sent me a certified letter outlining the problem including late fees, collection fees and attorney fees. I immediately called and offered to pay the past due amount and some late fees but refused to pay the collection and attorney assessments.

Fast forward several calls, letters and moths later and the attorney is now threatening to foreclose on their lien in the next 10 days if I do not call with an arrangement to pay the dues including over $1000 in collections and attorney fees.

I'm in California. The condo is ~$150,000 under and in limbo with BofA. I am not afraid of going to court and losing a decision that will force me to pay the dues I am already willing to pay. My concern however is the threat of the attorneys levying more fees against me that they will also seek in court. I don't know how much these will be but have heard figures as high as $70,000.

Am I being unreasonable?
Why would the association exercise the lien on a property that is $150k under?
Can they stick me with their attorney fees as well?
If this goes to court, will I have a case?

I owe about $3800 in dues, they want around $1800 in collections and fees. Despite the lies on the series of events, the latest letter sounded pretty serious and I don't want to end up with $70,000 in attorney fees as opposed to the $1800 they want now.


Their latest letter to me (summarized):

Our office is in receipt of your letter …You request for a waiver of late charges, interest, collection charges and attorney fees is denied for the following reasons:

1. You were notified in writing four times that the association had changed banks and failed to follow … After you discovered the error, you made no attempt to pay your outstanding balance.

2. You received a 10 day warning letter from the association that your account was delinquent and would be referred to collection … you failed to contact the property manager to make arrangements.

3. Our office sent you a pre-lien notice on March 14, 2011. You failed to contact our office to make payment arrangements.

4. On May 31, 2011, our office recorded a lien against your property.

5. I have left several telephone messages which you have ignored.

As of August 1, 2011 the total balance … If you fail to contact our office within 10 days from the date of this letter to advise you are paying in full, or, in the alternative, you fail to make monthly payment arrangements, our office will file suite against you to foreclose the lien which will result in additional attorney fees and court costs.

My letters to them that prompted this letter:

Thank you for your call on Monday, July 18^th. I truly appreciate your efforts in working with the association to reduce penalties accrued on my property at [omitted] in the [omitted] Homeowners’ Association, however, I must decline. While have stated and continue to maintain that I believe in being a good neighbor and am willing to pay 100% of what is owed, I must insist that many of the additional fees levied against my account have been done so in an unfair manner and refuse to pay them. Enclosed is a letter detailing the events as I see them, I will be sending a copy to the HOA board of directors.
Again, I truly do appreciate your efforts in this matter and am sorry we have thus far not reached an amicable solution.

Sincerely yours,

Event Summary

1. In April of 2010, the association changed the HOA due payment recipient from [HOA manager omitted] to [omitted] Bank and instructed its members to make the appropriate changes.
2. In April of 2010 I made the appropriate changes in my automated bill pay account to send all future HOA due payments to [omitted] Bank.
3. In the following months (April to June), after making the changes to [omitted] Bank, I monitored the automatic payments for the first couple payments and verified there were no problems.
4. Unknown to me, some months later, in late August, [omitted] Bank began rejecting my automated payments.
5. Despite several attempts, [omitted] Bank and [HOA manager omitted] have refused all following attempts at payment.

Notification and correspondence with [HOA manager omitted] & The Law Offices of [omitted]

6. On March 17^th, 2011, I received my first notification that there was a problem in the form of a certified letter from the Law Offices of [omitted] indicating the delinquency on my account in addition with the accrual of late fees, interest, collection fees, and attorney fees. I immediately called the number on the letter but the office was closed.
7. March 18^th, 2011, I called the Law Offices again and was redirected to Mr. [omitted]’s voicemail by a secretary. I left a message indicating this situation was all new to me and that I would like to handle it immediately. I also called [HOA manager omitted]. My calls were never returned.
8. March 29^th, 2011, I called [omitted] at [HOA omitted] to determine what had happened and how to fix it. [omitted] explained to me that when the association switched the dues payments from them to [omitted] Bank, many homeowners made the payments solely to [omitted] Bank when they should have made the payments to [omitted] Association, care of [omitted] Bank. She further explained that too many homeowners made his mistake and as a result, after accepting payments for three months, [omitted] Bank decided to reject payments not made to the association. I was never notified of this change. [omitted] indicated that the issue was now out of her hands but that she could attempt to talk to the Law Offices on my behalf and would get back to me.
9. On April 11^th, 2011, after a week of hearing nothing from the Law Offices or [HOA manager omitted], I called the Law Offices again and this time was forwarded to [omitted]. I explained the situation, my attempts at contact and offered to pay in a lump sum, the past-due HOA fees and a portion of the fees but that I would not pay over $1000 in fees for a problem I was not aware of, was not informed of on an account that was receiving payments that were being rejected. She was extremely rude (I later found out she had lost someone in her family). She first asked why I contacted Mr. [omitted] and not her as he was away from the offices handling depositions and did not respond to voice mail. I told her that I simply called the number in the letter and asked for the name that signed the letter, [omitted]. She then went on to explain that I needed to be an adult, indicated that she would look into my case and call me back by Thursday, April 14^th. Thursday came and went with no call and I forgot about the whole situation as I planned for my bachelor party and wedding.
10. Twice in May (once on the 20^th), I called [omitted] and received no response.
11. June 7^th, 2011, I received a letter from the Law Offices indicating a lien had been placed on the property and that the attorney fees had been increased. I would like to stress that while the Law Offices were unable to field my attempts at contact due to absence, they were still able to file the necessary paperwork that would justify them billing me more fees.
12. June 9^th, 2011, I called the Law offices and connected with [omitted]. This time she was extremely friendly and nice. I told her of my previous attempts to contact her and she indicated that she had suffered a death in the family and was unavailable. I then explained the situation, she apologized, gave me her personal cell, agreed to work with me to settle the issue and would contact the HOA. She also indicated that a payment plan could be made. The next day [omitted] called and indicated that the HOA would forgive $179 in fees, I asked about the collections and attorney fees and she indicated that nothing could be done there. I told her I would crunch numbers and think about it.
13. July 18^th, 2011, Carol called and left a message indicating that the HOA board of directors agreed to forgive $389 of the late fees if I could start making payments immediately but that they could not do anything about collections or attorney fees.

[Cat Damiano]

HI CA Owner,


Welcome to the forum and thank you for joining........

This could potentially turn into an even bigger headache then just paying the $1800 now. If you have that available, you may want to settle that amount even if you are strategically defaulting the one thing that you should continue to pay is the HOA because they could sue you personally filing a judgement and ultimately leading to wage garnishment.

I had a very similar experience with my HOA attorneys for just one payment that had been drafted wrong from my account which led to a domino effect slowly making my account delinquent to the point of a lien filing, and attorney fees, even though I had been paying on time each month after that error. And I might add that the error was clearly their fault, and I showed all the bank statements as proof but to no avail, trying to reason with and fight the large firms that work on behalf of the HOA turned out to be fruitless for me so I just ended up paying the amount to get the lien released.

[CA_Owner]

Thanks for your reply... after loosing sleep about it last night, I started thinking this may not be worth the lost sleep and hassle since I am not paying my mortgage and have the extra money.

For me there is a large principle piece here but like you said, I think they could care less what's "right" and more about what they can get away with.

Your reply has pretty much pushed me over the top. Guess it's time to swallow the pride and make a deal.

HI CA Owner,


Welcome to the forum and thank you for joining........

This could potentially turn into an even bigger headache then just paying the $1800 now. If you have that available, you may want to settle that amount even if you are strategically defaulting the one thing that you should continue to pay is the HOA because they could sue you personally filing a judgement and ultimately leading to wage garnishment.

I had a very similar experience with my HOA attorneys for just one payment that had been drafted wrong from my account which led to a domino effect slowly making my account delinquent to the point of a lien filing, and attorney fees, even though I had been paying on time each month after that error. And I might add that the error was clearly their fault, and I showed all the bank statements as proof but to no avail, trying to reason with and fight the large firms that work on behalf of the HOA turned out to be fruitless for me so I just ended up paying the amount to get the lien released.

[Cat Damiano]

I was just letting you know what my experience was. I just didn't have the money to fight them, and not to mention that there were not any attorney firms locally that wanted to go up against this large attorney firm that pretty much represents about 75 percent of HOAs here in Colorado so I really had no choice in my situation.

[jayguy0710]

Wow, I really hated HOAs before but this takes my hatred to a new level. Further proof that HOAs do more harm than good, IMHO. Ugh.

My only comment/question would be that are we sure that the HOA can actually foreclose, rather than just put a lien on the property which they have already done? Since you are underwater, wouldn't the HOA have to pay off any other liens on the property in order to foreclose? Even if that is the case, I'm not saying that the fact that they cannot foreclose will help you, since in reality what they probably would do is leave the lien on the property then go after you personally, like Cat said. But I do think the FC threat isn't realistic.

FWIW I have a family member who is an HOA/property manager and she said she gets this a lot - people FCing and not paying dues, and that they almost never go after the borrower. I'm sure it happens, and heck I've seen examples on this forum. But for such a small amount, I wonder if you could go to small claims court (since it's under $5K?) and represent yourself. Clearly based on the evidence you have presented to us (and I'm no lawyer nor a judge!) I think you'd have a pretty strong case that these clowns are yanking you around and being unreasonable. You're ready, willing, and able to pay the dues you rightfully owe them - but these fees are a JOKE. Perhaps you could fight it relatively cheaply (your time)?

Like you, CA Owner, I'm a big "it's the principle" type of person. It IS principle - this is ridiculous! But the conservative side of me realizes (or tries) when it is time to just cave in. I hate that feeling, though.

Good luck and keep us posted.