A growing number of homeowners associations do not have enough money stowed away in reserves to pay for repairs and replacements in neighborhoods over time, housing experts say.
About 70 percent of association-governed communities are underfunded, a 12.5 percent increase compared to 10 years ago, according to Association Reserves. Homeowners associations are increasingly going after home owners who fail to pay their dues. Beyond fines and notices, they are foreclosing on delinquent home owners.
Homeowners associations usually have the right to place liens on homes where the owners are delinquent on their dues. They have the ability to foreclose on houses, even if it’s to collect a few hundred dollars of unpaid debt. Prior to 2008, foreclosures by homeowners associations were rare. But HOAs now say they are becoming more common as associations look to respond to their shrinking dues.
About 63 million Americans nationwide live in communities governed by homeowners associations, compared to only 2.1 million in 1970. What’s more, four out of five buyers of new homes wind up in a community with an HOA.
Source: “Homeowners Associations in Crisis as 70% Are Underfunded,” Reuters (Jan. 15, 2014)