6 Reasons to Pay HOA Fees
Payment of HOA fees is critical in a short sale. Alma Korshak gives six good reasons to pay your HOA fees before a short sale.
1) Late Fees Add Up
If your HOA fees are not paid in a timely manner, the HOA will turn the delinquent account pver to an attorney to collect.
Alma says, “Once that account, your account, goes to an attorney to handle, in my experience, I see the HOA dues go from you owing two or three or five hundred dollars, to owing two thousand dollars.”
In addition, once the account has been turned over to the attorney, you can no longer deal with the Homeowner’s Association – you must deal with their attorneys.
2) Lenders Won’t Pay
Several years ago, lenders may have picked up delinquent dues, however, that has changed over the last few years. The servicer is only required to pay 6 months or 1% of delinquent dues so even if they might pay some, they are not obligated to pay all of the fees.
3) HOA Can Put a Lien on Your Property
HOA’s can put a lien on your property for the delinquent HOA fees you owe. The HOA or their attorneys become another party in the negotiation of the sale. This amount must be paid at closing or you risk the property not selling.
4) Estoppel Letters Cost Money
Every time Short Sale Facilitators must order an estoppel Letter from your Homeowner’s Association, it costs money. The fees can be anywhere from $200 – $250. You can see how the fees add up when you think about the original HOA fees due, the late fees, attorney fees and fees for Estoppel letters.
5) HOA Fees Make Negotiation More Difficult
If you have not paid your HOA fees, you make the negotiation of your short sale more difficult. There is now additional debt you owe – often increased because of late fees, lenders have limits on what they will pay, and you may have an additional lien on your property which makes the negotiation of your short sale more difficult.
6) You Pay in the End
Distressed homeowners are already in financial trouble, so ignoring smaller HOA fees and allowing them to grow into larger amounts just increases the debt that must be settled before closing.
If the short sale contract does not close, you end up losing in the end because you are still obligated to a mortgage you cannot afford in addition to the outstanding HOA fees.
“So that’s why I strongly advise all of my clients, once I do get the short sale into office to please, whatever you do,” Alma said.
“I understand, you’re under hardship, you’re no longer able pay your mortgage. But if you are in a community where there is a homeowners association, I really do strongly advise that you do keep up with those because it makes the negotiations of your short sale a lot more difficult when it comes to negotiating with the homeowners association and the law firm.”
Paying your HOA fees helps Short Sale Facilitators negotiate the best possible deal when you sell your home through a short sale and get out of a mortgage you can no longer afford to pay.