Yes, your HOA, or homeowners association, can foreclose on you. Yes, your HOA can get you out of your home and rent it to someone else.

There is much confusion over what your homeowners association can do to you if you stop paying your dues.

It gets especially tricky when someone is not paying their mortgage or has filed bankruptcy.

Associations are feeling the pinch of the mortgage crisis too. When a significant number of owners in a community stop paying their dues, it can be a financial strain on the whole community. The money is needed for common areas, maintenance, reserves for future costs and expenditures.

But many people who have stopped paying their mortgage and maybe waiting for a short sale or a foreclosure to finish think that the HOA can’t do anything to them.

This is not true.

HOAs are starting to enforce their rights and foreclosing their lien against the property.

No, it does not wipe out the mortgage or mortgages on the property. It acts more like an eviction.

The homeowner who is not paying the dues can be forced out of the home. The HOA will likely then put a tenant in the property to pay the back dues and continuing dues. Any overage would then be turned over to the mortgage company.

See an article on an extreme example of an HOA foreclosure here.

People who have filed bankruptcy may be under the misconception that they are off the hook for all HOA dues.

This is also not correct.

Any dues that were owed up to the day a bankruptcy case was filed are discharged as no longer being personally owed. But dues that become owed after the bankruptcy has been filed are still personally owed – and the balance keeps rising.

This becomes a problem when a debtor in bankruptcy has surrendered the home and no longer lives there, yet the mortgage company will not finish the foreclosure. The association may be limited to how much they can recoup from the lender once the foreclosure is finished (read here).

So will your homeowners association come looking to you for the balance if you stop paying your HOA dues?

Get the advice you need in how best to exit your home mortgage and HOA dues from me.