Can Unpaid HOA Fees Result in Foreclosure?
Question: My grandmother lives in Scottsdale, and my wife and I live in Chicago. We only visit my grandmother two or three times a year. Although we thought my grandmother was still able to manage her financial affairs, she recently called us to say that she was being evicted from her Scottsdale home for non-payment of HOA dues. My grandmother owns her $450,000 home free and clear. My wife and I immediately flew to Scottsdale to try to understand what happened. Several years ago my grandmother apparently failed to pay some HOA dues. These HOA dues only totalled $700 originally. After the late charges, interest, and legal fees, however, there was almost $8,000 owed at the foreclosure sale 2 weeks ago. An investor apparently bought the home at the foreclosure sale. The investor is now trying to evict my grandmother. How can that happen? What do I do?
Answer: If HOA dues are not paid, these HOA dues can become a lien on the home. The HOA can foreclose this lien by a judicial foreclosure lawsuit filed with the court. The homeowner is served with the lawsuit by a process server. If the homeowner after being served with the lawsuit still does nothing, there will be a default judgment of foreclosure. The judge will then order a foreclosure sale on the courthouse steps by the Maricopa County Sheriff’s Office.
If your grandmother was competent and not a vulnerable adult, was properly served, and still did nothing after being served with the lawsuit, the investor who purchased your grandmother’s home at the foreclosure sale should now own your grandmother’s home. You must contact a real estate attorney immediately. The real estate attorney can hopefully negotiate a “re-purchase” of the home by your grandmother for a reasonable amount of money above what the investor paid at the foreclosure sale, especially with the potential of adverse publicity to the investor if the media will be involved. No investor wants articles in the media saying “investor John Doe evicts grandmother because of $700 HOA bill.”