This article is written by Peters and Associates.
Question: Last week, I got a letter saying my HOA was foreclosing on my home because I owe them $2,000 that’s past due. Can they do that? I’m current on my mortgage and don’t think I owe them money!
Answer: Yes. In Nevada, a homeowners association has the right to foreclose on a home regardless of whether you’re current on your mortgage, even if you dispute the amount you owe. In fact, your letter probably reads, “Warning! If you fail to pay the amount specified in this notice, you could lose your home, even if the amount is in dispute.” (That’s required by law).
HOA foreclosure has been in the news a lot over the past few years, most recently when Gov. Brian Sandoval signed into law Senate Bill 306, which adds several new rules governing HOA foreclosure. Unfortunately for the reader who asked today’s question, the bill doesn’t take effect until Oct. 1.
HOA foreclosure is no joking matter. Once the process has started, HOAs tend to foreclose quickly, leaving many (former) homeowners upset and confused when they’re evicted by new owners. Adding to the misery, as of this writing, most HOA foreclosures are permanent, meaning there’s no right of redemption.*
Hope is not lost, though. It’s usually possible to negotiate with your HOA to stop the sale and work out a payment plan — sometimes for less than what you owe. The truth is, most HOAs don’t want to foreclose on residents, they just want to get paid. (They’re about as strapped for cash as the rest of us). If you communicate with your HOA board, you usually can work something out.
If your HOA board won’t work with you, there may be other options available to stop or delay an HOA foreclosure, including bankruptcy and filing a lawsuit. Before going down those paths, however, I encourage you to try to handle the situation outside of the court system.
*When Senate Bill 306 goes into effect in October, homeowners will have 60 days after the date of foreclosure to pay the auction-sales price plus other expenses as noted in NRS 116.31166 to get their home back.
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Please note: The information in this column is intended for general purposes only and is not to be considered legal or professional advice of any kind. You should seek advice that is specific to your problem before taking or refraining from any action and should not rely on the information in this column.
