What Is An HOA Foreclosure In Phoenix, AZ?

What Is An HOA Foreclosure In Phoenix, AZ?

The shared amenities, stable home values, and community vibe are a drawcard for over 2.2 million Arizona residents who choose to live in an HOA, but it's not all plain sailing for these homeowners.

To enjoy these perks, they must follow a set of strict rules and pay annual HOA fees to ensure all community members benefit equally.

Failure to comply with these terms and conditions can lead to severe consequences, like fines, an HOA lien, or even an HOA foreclosure. Read on to find out how this process works.

HOA Fees, Fines, and Assessments

Maintaining amenities like swimming pools, golf courses, gyms, and other common areas is expensive. In an HOA, each homeowner contributes equally to these costs in the form of annual or monthly HOA fees.

From time to time, the HOA may charge an additional fee, called an HOA assessment, to pay for major expenses like upgrades, significant repairs, or replacements.

To ensure the smooth operation of the HOA, every homeowner must pay their dues. In return, they get to use these amenities.

Homeowners who do not pay their HOA fees on time are subject to late fees. Those who break the rules repeatedly must pay a fine.

In Arizona, these past-due amounts automatically become a lien on the homeowner's property, although the HOA may record the lien with the county if preferred.

At first, the HOA will attempt the usual methods of fee collection, like:

  • Removing the homeowner's right to use amenities
  • Calling the homeowner
  • Sending letters requesting payment
  • Filing a lawsuit or money judgment

If none of these tactics work, the HOA can commence with the foreclosure process, provided the amounts due exceed $1,200 or the amounts have been outstanding for more than 12 months.

What Happens During an HOA Foreclosure?

An HOA can foreclose on a property regardless of whether the mortgage is paid. In Arizona, the HOA foreclosure process is a judicial one, with the following steps:

  • The HOA files a lawsuit against the homeowner
  • The homeowner may choose to file a defense
  • The court sets a date
  • The judge hears the arguments and decides on a verdict
  • If the HOA wins the case, the home is sold at auction
  • If they rule in favor of the HOA, the home is sold at auction
  • Some of the sale proceeds go toward paying the HOA lien

You can stop the foreclosure process at any time before the sale takes place.

How to Stop HOA Foreclosure

The best way to stop an HOA from pursuing foreclosure is for the homeowner to bring their past-due account up to date. In most cases, an HOA will allow them to set up a payment arrangement for past-due amounts.

Homeowners may also contest an HOA foreclosure in court if they have proof of inaccurate billing or unrecorded payments.

Avoiding HOA Foreclosures

No HOA board wants to deal with the unpleasantness of an HOA foreclosure. Rather, hire an accomplished property manager to encourage timely payments and follow up on past-due amounts.

PMI Phoenix Valley can help you get your HOA back on track regarding outstanding fees, assessments, and fines. Our years of experience, accurate record-keeping, and effective fee-collection methods will help your HOA thrive and prosper.

Talk to us about our full range of HOA management services today.