Is Homeowners Association Foreclosure Action legal?

The case of the 81 year old widow, Wenonah Blevins might sound familiar for many, who live in Houston. She had fallen behind by $814.50 on HOA (Homeowners Association) assessments in her Houston subdivision. HOA foreclosed the lien on her property without her knowledge and her $150,000 home for only $5,000 in 2001.

This case rises lots of questions such as: how could this happen? The widow was two years in arrears – the annual dues of homeowners association were $400 – so she dropped off a check for $800 to the HOA in August 2000. They didn’t cash the check because the legal proceedings were already begun against her. Although the HOA tried to serve the require legal process on her, this was apparently attempted after 7 p.m., when she widow refused to open the door for fear of prowlers. As a result of this process, Blevins’ home was sold for $5,000, in a lack of competing bidders.

Another case, is the Pamela Bernhardt, a 52 year realtor’s case. In April 2005 she was finishing the renovations on her two-story rental home, which they – she and her husband – owned, without any mortgage and default. When she arrived to the house one day she found a handwritten note posted on the front door, notifying her that the home had been sold at a foreclosure sale 7 months earlier. The reason:  nonpayment of a delinquent $420 assessment fee. The note informed her  that the house was sold for $1,600 with no other competitive bid, although she spent more than $48,000 for renovations.

Terry Sears, an attorney for the HOA claims that Notices of Default were sent, but  Pamela Bernhard stated that she never got any notice and she paid her bills in time.

There is a battle between homeowners and HOA, and it’s not concentrated in the state of Texas. The problem begins where the states permit a nonjudicial HOA foreclosure. Unfortunately we don’t have reliable statistics on how many homeowners have faced this issue, but the fact is, that HOAs have the power to file the foreclosure as a threat and collect several thousand dollars in late fees, interest, fines and attorney fees for only a $300-600 delinquency.

Posted by Istvan Fekete on Aug 6 2010. Filed under Foreclosures. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.