Many homes, condominiums, and townhouses in Florida will be included in a homeowner’s association (HOA). If the property is part of an association, the homeowner will likely be required to make payments to the HOA. The fee will vary between each association, but in some cases can be hundreds of dollars each month. Further, the HOA may be able to add late fees, attorney costs to the balance. If the delinquencies pile up, an HOA foreclosure action could be filed.
Homeowners are often surprised to learn that their homeowners’ association may be able to foreclose on their home. HOA’s may be able to seek foreclosure in Florida for missed payments or failure to maintain the property. Additionally, there may be other grounds set forth in the Association’s declarations and by-laws. In many instances, an HOA foreclosure in Florida will even involve homes with no mortgage or other liens. Fortunately, homeowners who have fallen behind on HOA payments still have rights to challenge the foreclosure. If you need to stop an HOA foreclosure in Florida, contact Florida Law Advisers, P.A., to speak with an HOA foreclosure attorney.
Can the HOA File Foreclosure in Florida?
Banks are not the only institutions that seek to foreclose on homes in Florida. Thousands of foreclosure cases are filed by homeowner’s associations in Florida each year. HOA’s are very aggressive, in some cases seeking foreclosure when the homeowner is only a few dollars behind on their bill. Further, it is not uncommon to have a balance of only $100 increase to over $5,000 after the HOA adds their late fees, interest, and attorney fees. Fortunately, some options can help prevent an HOA foreclosure sale.
Similar to banks, the homeowner’s association will need to file a foreclosure case in court and receive approval from a judge before the home is foreclosed. See Florida Statute 720.3085. During the court process, the homeowner will have an opportunity to raise defenses and challenge the foreclosure.
The court process can move quickly if timely action is not taken to fight the HOA. If foreclosure proceedings have begun, contact a foreclosure defense attorney right away. There may be legal defenses that can be used to prevent the foreclosure of your home. Additionally, there may be other options available to stop the HOA foreclosure.
HOA Foreclosure for Late Fees
HOA’s are allowed to add interest, legal fees, and late fees under Florida law. In most homeowner’s association foreclosure cases, the number of attorney’s fees charged by the HOA will be far in excess of the amount of HOA dues owed. In some cases, the attorney’s fees are more than 3 times the amount of the past due HOA fees. However, if your foreclosure defense lawyer is successful in getting the case dismissed, the HOA may be held responsible for reimbursing you for your attorney’s fees. See Florida Statute 57.105.
Required Notice for an HOA Lien
Under Florida Statute 720.3085, before a homeowners’ association foreclosure case can be filed, the HOA must provide the homeowner with proper notice. Florida’s law requires the HOA to send notice to the homeowner of their intent to record a lien. Their notice must be sent at least 45 days prior to recording the lien. The notice must include details of the amount owed and an opportunity to pay the amount before filing foreclosure. The notice must meet all the requirements outlined in the Statute. For information regarding a specific notice, contact an HOA foreclosure defense attorney for legal advice.
Notice of Intent to File HOA Foreclosure
Florida’s foreclosure law requires the HOA to send the homeowner notice of their intent to foreclose on the lien. This notice must be sent at least 45 days before filing for a homeowner’s association foreclosure. The notice of intent to foreclose the lien should be sent after the HOA files their lien for fees. If the HOA does not send the homeowner both the notice of their intent to record a claim of lien and notice of intent to foreclosure on the lien, they should not be entitled to foreclosure.
Both notices are required to be sent by registered or certified mail with a return receipt. See Florida Statute 720.3085(4)(b). The notices must be sent to the address of the property they are intending to foreclose. If the property owners do not live in the home, the HOA must send the notices to both the homeowner’s mailing address and the property address.
Will Chapter 13 Bankruptcy Stop an HOA Foreclosure?
When a homeowner files for bankruptcy in Florida, an automatic stay is issued. The automatic stay goes into effect immediately after a Chapter 7 or Chapter 13 bankruptcy is filed. The automatic stay will put an immediate stop to an HOA foreclosure in Florida. The automatic stay requires all collection activity against the debtor to stop immediately, including a foreclosure sale that has already been scheduled.
Eliminate HOA Fees in Bankruptcy
Under bankruptcy law, HOA fees may be discharged in Chapter 7 or Chapter 13 bankruptcy. However, determining the amount that will be discharged requires careful consideration by an experienced bankruptcy lawyer. Generally, HOA fees that have been incurred prior to the order of relief will be eligible for discharge. However, bankruptcy law will not permit the discharge of HOA fees incurred for any period after the order for relief has been entered and the debtor still retains either a possessor or legal interest in the property.
If a debt is discharged in bankruptcy, the borrower will be released from all personal liability on the debt. The discharge is a permanent court order releasing the borrower from the responsibility of having to pay the debt. Further, the discharge prohibits a creditor from taking any collection action against the borrower.
Chapter 13 to Remove HOA Liens on Your Home
Under chapter 13 bankruptcy law, junior liens (including mortgages or a homeowner’s association liens) can be stripped, or removed from homestead property. If the lien is stripped down to the market value, the remaining balance of the debt will be treated as an unsecured debt in bankruptcy. Unsecured creditors typically receive nothing or only a small amount of the balance before being discharged. Further, after the discharge is granted, the HOA will be required to remove the lien from the property.
How to Force the HOA into a 5-Year Payment Plan
A Chapter 13 bankruptcy can allow a homeowner to force the HOA into a five-year payment plan. Essentially, the homeowner will have a 60-month loan to repay the back-due HOA fees, regardless of if the HOA approves it or not. Most of the time, the interest rate applied to these types of payment plans is around 6%. The rate of interest under a Chapter 13 plan is often less than the rate an HOA may charge. For more information about a specific case or payment plan contact a Tampa bankruptcy lawyer to schedule a consultation.
Consult Bankruptcy & Foreclosure Defense Law Firm
If you being threatened with an HOA foreclosure in Florida contact Florida Law Advisers, P.A., our Tampa foreclosure attorneys are experienced in both bankruptcy and foreclosure defense. Every foreclosure and bankruptcy case is different, and our vast experience allows us to cater our services to each client’s individual needs. All of our initial consultations are free and convenient payment plans are always available. Regardless, if you need help HOA foreclosure in Florida, Chapter 7, or Chapter 13 we can help. Call us at (800) 990-7763 to speak with a lawyer, we are available to answer your calls 24/7.
Frequently Asked Questions
Yes, your primary residence (homestead) property is protected in bankruptcy. Therefore, if you file Chapter 7 or Chapter 13 bankruptcy you will not have to lose the home.
Yes, when a Chapter 13 case is filed an automatic stay is instantly put into effect. The automatic stay is a federal law that stops all collection activity, including foreclosure sales already scheduled to occur.
Yes, Florida law does allow HOA’s to file for foreclosure. In many ways, it is a lot easier and quicker for an HOA to foreclose on a home than a mortgage company. Therefore, if you are being threatened with foreclosure from the HOA you should contact an attorney right away.
The HOA will likely record a lien on the property for the amount due. If the lien remains unpaid, the HOA may begin a foreclosure case and force a sale of the property. There is no minimum amount required for the HOA to file foreclosure, they can file foreclosure for even one dollar.
Chapter 13 bankruptcy will stop the foreclosure auction, even if the auction is already scheduled. In addition, it may force the HOA to provide you five years to pay the balance without additional interest charges.
Chapter 13 bankruptcy can allow a homeowner to force the HOA into a five year payment plan. Essentially, the homeowner will have a 60-month loan to repay the back-due HOA fees, regardless if the HOA approves it or not. Chapter 7 may also stop the foreclosure sale but it does not have a payment plan option, unlike Chapter 13.