As a mortgage-paying homeowner, the very idea that an HOA can kick you out of your house might offend you. What’s the purpose of owning a home, if someone can just ask you to pack up and leave?
The power of an HOA to kick you out of your house is more complicated than simple eviction. This is a good thing. However, HOAs do still have the power to make you leave. This sounds confusing, I know, but I clear it all up in this article.
HOAs can’t evict a homeowner. But they can place a lien on the property or mortgage if you fail to pay fees or fines. Liens allow them to foreclose on a property, indirectly evicting you. Petty harassment by HOAs can make you “voluntarily” leave. Renters can be kicked out for violating HOA renter rules.
Do HOAs Have Legal Power?
When it comes to legal powers, different HOAs will have different levels of legal powers that are based on the way the HOA was formed. HOAs that are also non-profit organizations have a lot of power over other owners and the HOA land.
Generally, HOAs have the legal authority to enforce community policies related to rentals, guests, structural renovations, choice of paint for the exterior, etc. As a homeowner, you are liable to pay the HOA fees for maintaining the property and the overall well-being of the residents.
It is best to follow the HOA rules (when they are fair) and pay the fees on time. If you violate any HOA laws then you will be fined. In case of non-payment, you will be fined repeatedly, although typically only until to a certain point, after which the repercussions escalate.
An HOA may have the legal power to add these unpaid fines or fees to your property tax bill. Continuous non-payment of these fines and fees can lead to your home being forced into foreclosure, but I will speak more about this in a later section.
The degree of legal powers may vary, but what’s common between all the HOAs is that they can create some serious problems for you legally. So, arm yourself with the latest HOA Covenants, Conditions, and Restrictions (CC&Rs) to know your rights.
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Can HOA Tell You What to Do Inside Your House
HOAs Cannot Evict You From the House You Own
When you purchase a property in an HOA-regulated community, you are agreeing to follow the community policies and timely payment of the HOA fees. You are signing a legally binding contract. In case of any rule violation or non-payment of fees, your HOA will obviously levy a fine on you.
However, your HOA is not your landlord and therefore cannot issue you with an eviction notice and kick you out of a house that you own, even if you violate one of the terms of the contract.
I do want to point out here that you need to make absolutely sure that there is no “right to evict” clause in your HOA contract. Even if this clause violates state law and a result is not enforceable, it will be a major mission to get the matter cleared up.
While an HOA cannot evict a homeowner directly, there are certain legal actions that an HOA can take against a homeowner that might affect their ability to remain in their home.
Most HOAs have different powers, so the enforceability of any action is dependent on the stipulations in your HOA’s CC&Rs, adequate cause, and state/county laws. Therefore, it is advisable to be well-versed on what you can and cannot do as a homeowner with an HOA as well as what your HOA can and cannot do legally.
I discuss these actions below.
Placing a Lien Against Your Property or Mortgage
HOAs may have the power to place a lien against your property or your mortgage. Broadly, this means that they can make a financial claim on your property to use as collateral.
It is very important to know the circumstances under which your HOA can place a lien. Falling behind in your HOA fees or if a violation fine is long overdue, your HOA has the authority to place a lien against your property.
Your HOA wants to avoid the hassle of lawsuits as much as you do. So, it will only place a lien in case of serious HOA rule violations. Before placing the lien, you will be given plenty of warnings and time to make things right.
You really do not want a lien against your house because, in essence, your house is no longer just your house. There are external claims on it, which makes things like refinancing or sales an issue. Even if you are still able to sell your home, you will legally owe the HOA a portion of the sale proceeds equivalent to the amount outstanding to them.
Alternatively, the financial burden would fall to the new owner, and what person is going to take on paying outstanding fees or fines as well as buying a new house? They will very quickly move on to greener pastures and you will have difficulty selling your house.
While a lien is not forcing you out of your home, it is the first step to foreclosure, which is indirect eviction.
What to Do When HOA Places Lien Against Home?
You are not, however, on a one-way street to foreclosure as soon as a lien is placed on your property; you can have it removed, and doing so should be your first priority.
The first step is to pay off all the debts owed to the HOA. This amount must include violation fines, due assessments, interest, and any other applicable fees. Repaying the HOA lien in full is way less costly than trying to fight it.
If you believe that the lien is unfair and unjustified because your HOA has not kept its end of the bargain, for example, it has not maintained the property or it has totally neglected some necessary renovation work, then you can file a counterclaim.
Consulting an attorney and taking a legal opinion is always a good idea. Your attorney can then guide you and help you remove the lien.
Foreclosing on Your Property
HOA’s CC&Rs and state law give an HOA the power to foreclose on your house when you fail to pay assessments and fees. Even if all your mortgage payments are up-to-date, your home can still be foreclosed if you have not paid the assessment.
Foreclosure by an HOA means that your house will be sold in order to provide the funds needed to pay their fines or fees.
The foreclosure can be judicial whereby your HOA will have to file a lawsuit and get court-judged permission to sell the home to satisfy the HOA’s lien. Alternatively, it may be non-judicial foreclosure, whereby the HOA follows the specific procedures dictated by the state laws and the CC&Rs.
The nature of the foreclosure, whether judicial or non-judicial will be decided by the state laws and by the terms mentioned in the CC&Rs.
Some states have put restrictions or prohibitions on HOAs from foreclosing on a homeowner’s property. In Texas, HOAs cannot foreclose if the lien includes only fines and associated legal or admin fees.
There are states like California where the law regulates how and when HOA can foreclose an assessments lien. In California, the unpaid amount must be at least $1,800 or the amount must be at least one year overdue before the HOA can start the foreclosure proceedings. It is very important that you know about the laws governing HOA foreclosures in your state.
Some HOAs are notoriously known for foreclosing properties just because homeowners missed a few payments. Therefore, it is always well-advised to consult a foreclosure attorney at the earliest when you are facing foreclosure on your home.
Most HOAs prefer to reach a solution instead of having the owner move out of their own home. A property foreclosure is an extreme measure that HOAs try to avoid.
What Happens to the Mortgage?
When an HOA forecloses on a mortgaged property, the borrower who has signed the promissory note remains liable for the debt even after the HOA gets the ownership of the property.
After the foreclosure, it’s likely that the borrower will stop paying the mortgage. Then the HOA can either pay the first mortgage holder to prevent the mortgage from foreclosing or let the first mortgage holder foreclose.
Sometimes, HOA prefers foreclosure by the first mortgage holder as it guarantees payment of the HOA assessment either by the first mortgage holder or a third-party purchaser.
Can You Get Your Home Back After Foreclosure
You can get your house back after foreclosure. Some states like California and Texas have laws that allow homeowners to redeem their property after an HOA foreclosure. To do so, the homeowner must pay the total lien amount, interest, and attorneys’ fees and cost after the foreclosure sale.
Petty Harassment by HOA
It can get really unpleasant when people who are responsible for your well-being resort to petty harassment. There have been instances where HOAs made owner’s life so miserable that they had to sell and move elsewhere. So, there is no formal eviction and you technically do not have to move, but it is preferable to do so.
HOA harassment is a reality. That’s why a new law came into effect in 2016 that states that boards of directors are required to address members’ claims of harassment based on race, color, religion, national origin, sex, familial status, and disability. This law covers harassment by other homeowners, board members, managers, and vendors. The law requires that boards take prompt action to investigate and end harassment
So exactly how can an HOA make your life miserable? For starters, some rude HOA board member can misuse their position and power for their own gain or harass those whom they don’t like.
Everybody wants peace in the community, but when personal feelings get in the way, people are known to get unreasonable. Your HOA can make your life miserable in a completely legal way. For example, heavy fines might be levied on you for any minor infringement or any small violation by you can be punished to the full extent of the by-law.
If your HOA is out to get you, there are several ways it can legally make your life difficult. From delaying or denying permission for any renovation work to putting unnecessary restrictions on your home, your HOA has plenty of weapons in its arsenal.
How to deal with Petty Harassment by HOA
Knowledge is power. So the first step is to acquaint yourself with the updated HOA CC&Rs. If you feel, your HOA is doing something that’s violating the community law, you can call them out. It also helps if you are aware of the state laws related to HOA.
A dispute can never be good. The intelligent thing is to sort it out in the most inexpensive and hassle-free way. You can ask for support from other HOA board members who can be trusted to act judiciously and fairly.
You can address the problem openly by writing a formal letter, bringing it up in the next HOA meeting, or formally requesting the intervention of the HOA manager who will act as an impartial party and resolve the matter.
As I mentioned, knowledge is power, and there are some things that HOAs just cannot do. You can read about these in my other article on Unenforceable HOA Rules.
Can HOAs Kick out Renters?
Before deciding to rent your property, you must check the HOA renter restrictions or policies. Go through the governing documents such as the CC&Rs and bylaws.
Some HOAs allow renters but most don’t. Most HOAs have strict rental and subletting policies because of security and community insurances that depend upon the percentage of owners versus renters in a development.
Furthermore, renters are much less inclined to take care of a property that does not belong to them, resulting in homes becoming run down and affecting the “tone” of the neighborhood.
HOAs that allow renters have provisions that a homeowner must follow. Your HOA will want access to the lease and will require your tenant to sign off on the HOA rules as well. At the end of the day, as a homeowner, you will be responsible for any damages or violations your tenant commits.
Renting your vacation home is a great way to make some extra cash. But, if your property belongs in an HOA-regulated community, then having rules for renters make sense. It’s important that in your absence your tenant complies with all the rules and take responsibility for their actions.
The HOA rules for renters protect the integrity and the well-being of other homeowners. You would hate it if your neighbor’s tenant was creating a ruckus next door. So, HOA rules for renting could be strict but they make sense.
When you rent your property, not all your rights as a homeowner will be transferred to your tenant. Your tenant will join the HOA as a temporary member and will have certain rights like using the common area. Certain rights like the right to vote for board members might still be reserved only for the homeowners.
Some rights are transferable and some are not. HOA renting policies are different in different HOAs. It is always best to make sure that you and your tenant know the rights to avoid any violation in the future.
In case your tenant violates any of the HOA rules then the HOA board will notify you. If there is a violation fine, that will also have to be paid by you. Usually, tenants are expected to abide by the rules, but if for some reason a tenant is found guilty of multiple violations then your HOA can demand the eviction of your tenant.
In case something is extremely serious, like if your tenant commits a crime, then the HOA has the power to report your tenant directly to law enforcement.
Tax Break on HOA Fees in Rented Properties
If you are unable to pay the HOA fees but you are using your property as a rental, then it is seriously worth investigating the tax laws in your area. Instead of falling behind on payments, which could cause you serious problems, you might be able to claim the fees as a tax deductible. For example, the HOA fees are tax deductible on rented property in California.