What happens if you don’t pay HOA fees? This is a question many homeowners ask when they start falling behind on payments. In Virginia, failing to pay can lead to serious consequences, ranging from minor late fees to more severe actions such as foreclosure.
What Happens if You Don’t Pay HOA Fees?
Before diving into the consequences, it is important to understand what HOA fees are. These fees help cover the cost of maintaining the community, including landscaping, common areas, pools, and other shared amenities.
Generally, buying a home in a homeowners association comes with automatic membership. It also comes with financial obligation for the homeowner, including the obligation to pay regular dues.
Missing payments can lead to many potential consequences, including but not limited to late fees and interest charges, suspension of privileges, legal action, collection agencies, liens, and even foreclosure.
1. Late Fees and Interest
The first thing homeowners can expect is a late fee. Most associations charge a set dollar amount for missed payments. In addition to the fee, interest may start to accumulate on the unpaid balance. These charges can add up quickly, making it even harder to catch up.
In Virginia, Section 55.1-1824 allows associations to charge a late fee for dues that go unpaid within 60 days of the deadline.
2. Suspension of Privileges
When fees remain unpaid, associations often suspend access to community amenities. This might include the pool, clubhouse, gym, or even community events. Some associations may also suspend voting rights.
The goal is to encourage owners to pay by temporarily limiting their use of shared resources. Once they settle their debt, they regain their member privileges.
3. Legal Action
If the account stays unpaid, the association may decide to take legal action. This could involve sending the debt to an attorney or pursuing a court judgment. In Virginia, an HOA can file a lawsuit to recover delinquent dues.
Once a court rules in favor of the association, the board may be able to garnish wages or bank accounts, depending on the judgment. This process increases the total amount owed, since the owner will also be responsible for legal fees and court costs.
4. Collection Agency
Associations may also turn unpaid balances over to a collection agency. When this happens, the agency takes over communication with the homeowner. They may call, send letters, and try to negotiate a payment plan.
Many collection agencies also report delinquencies to credit bureaus. This can affect the owner’s credit score and make future borrowing more difficult.
5. Liens
Not paying homeowners association fees can also result in a lien. In Virginia, an association has the legal right to place a lien on a home when assessments are unpaid.
This lien is recorded with the local government and becomes a public record. It can block the homeowner from selling or refinancing until they pay the debt. It also means the association has a secured interest in the property.
6. Foreclosure
In more extreme cases, an association may foreclose on a property to recover unpaid dues. Under Section 55.1-1833 of the Virginia Code, an association can initiate foreclosure if the owner does not pay dues after notice and an opportunity to cure.
Foreclosure allows the association to sell the home to recover the balance due. While rare, this is a real possibility for serious delinquencies, especially if the board has tried other remedies without success.
Can You Be Evicted for Not Paying HOA Fees?
Eviction usually applies to renters, not homeowners. In Virginia, owners cannot be “evicted” in the traditional sense for unpaid association fees. That said, foreclosure is still on the table.
If the association forecloses on the property, the homeowner may lose their home. This is different from an eviction, but the result can be similar.
Typically, landlord-homeowners are responsible for paying association dues. They may include this in the rent, making renters pay instead. Still, the association will typically go after the landlord-homeowner, not the tenant. If this happens, the landlord-homeowner could lose the home, affecting the tenant as well.
If a tenant stops paying rent, the landlord-homeowner can pursue eviction proceedings. This will require legal action and the help of an attorney.
Can Late Dues Payments Affect Credit Score?
Late payments can negatively impact credit, particularly if the debt is sent to collections. While associations don’t typically report delinquencies directly to credit bureaus, collection agencies do.
A collection account can stay on a credit report for up to seven years. That can lower the homeowner’s credit score and affect their ability to secure loans or credit cards. Even if the homeowner eventually pays the debt, the collection record may still remain on the report.
The Negative Impact of Nonpayment
Not paying HOA fees affects more than just the individual. It has a ripple effect across the entire community. When some homeowners don’t pay their fees, the association may struggle to cover its expenses. This can delay repairs, reduce maintenance, or lead to special assessments for everyone else.
While a few delinquent homeowners may not have a significant impact on larger associations, smaller communities feel the negative effects. In small associations, one or two unpaid accounts can make a noticeable difference.
Associations rely on a steady flow of income to function. Delinquencies can also affect property values, especially if common areas start to deteriorate.
In worst-case scenarios, the association may have to raise fees for paying members to make up the shortfall. This might breed resentment and result in tension between paying and delinquent members.
What Happens if You Don’t Pay HOA Fines?
Fines are not the same as regular fees or special assessments. The association usually imposes fines or penalties for rule violations, such as parking violations, landscaping issues, or unauthorized changes to property.
When a homeowner fails to pay fines, they can face the following penalties:
- Late fees or interest charges
- Suspension of privileges
- Legal action
Some states don’t allow associations to place a lien and foreclose on a debt consisting solely of fines and attorney fees. In Virginia, associations can have this authority if the governing documents grant it.
Keep in Mind
Homeowners must pay regular fees to their association to ensure continued operations and success for the community. Consequences for nonpayment may start small, but they can quickly escalate to foreclosure.
National Realty Partners is a leading provider of association management services in Virginia. We help communities thrive. Call us today at 703-435-3800 or request a proposal online to get started!
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