Should I continue to make my monthly HOA maintenance payment until I no longer own the unit?

Asked over 2 years ago - Phoenix, AZ

I have an interest only loan on my condominium in AZ. A year ago, I tried to do a loan modification so I could secure a better loan in which I had a lower interest rate and some of my payment was going toward principal. The appraisal came in too low for what I owe on the mortgage and therefore, I was denied.
I am over $40,000 under- water on my condo, based on last year’s appraisal. Considering the short sales this past year in my complex, I am guessing $40,000 is on the low side of how much I’m under water.
In addition, my homeowner’s association is about to announce a special assessment of $12,000 per unit for repairs. They currently receive monthly maintenance fees and need more to make roofing repairs. I will be obligated to pay this special assessment and I cannot afford it. Between not being able to do a loan modification, paying nothing on principal (cannot afford to pay more each month) and the upcoming special assessment, it has left me wanting to walk away. I have never been late on my mortgage payment or my monthly HOA maintenance fees. Is there a way to speed up the process if I walk away? Should I contact the lender and let them know I cannot continue to afford my house? Should I continue to make my monthly HOA maintenance payment until I no longer own the unit?

Attorney answers (4)

  1. Robert H Nagle

    Contributor Level 10

    1

    Lawyer agrees

    Answered . It would be of great benefit to you to meet with an attorney to discuss all of your options, of which you have several. But, to answer the specific questions, yes, you can speed things up by short selling your unit rather than waiting for the lender to foreclose. A short sale could be completed in less than 90 days, while waiting for foreclosure could take at least 6 months. The HOA dues, unfortunately, are a personal obligation. So, time is not on your side. But, you still have options. So, consider meeting with an attorney to discuss alternatives.

    Robert Nagle

    Accessing this website or receiving an electronic transmission from Nagle Law Group, P.C., or any specific... more
  2. Jennifer Peddy Berg

    Contributor Level 7

    1

    Lawyer agrees

    Answered . You should definitely consult an attorney to discuss your options as far as short sale, foreclosure, bankruptcy, etc. You may also want to look into a Deed in Lieu of Foreclosure....this is another way to speed up the process of giving a property back to the lender. Again, contact an experienced real estate attorney to assist you with this because there are rights you need to ensure are protected.

    Also, review your CC&Rs about special assessments. Sometimes there are caps on how much special assessments can be, or how the Board goes about getting approval for these special assessments. Many times, the HOA does not follow proper protocol, thus potentially relieving one's obligation to pay the special assessment until they do it correctly (which could buy you some time and ultimately allow you to avoid bankruptcy). Imposing a $12k special assessment for roof repairs sounds pretty high since many contractors will charge far less than this to re-roof a 1,800+ square foot single family residence.

    I think you would be wise to contact an experienced attorney to discuss all of your options prior to making any decisions.

    Good luck!

    Jennifer Peddy Berg
    The Peddy Berg Law Firm, PLLC

    Ms. Peddy Berg is licensed to practice law in Arizona and California (currently inactive); and her office is... more
  3. Scott L Greeves

    Contributor Level 11

    Answered . When dealing with an HOA, it is important to consult with a skilled debt settlement / bankruptcy lawyer. There is not a cookie cutter answer to your question. The language of your CC&Rs is the first thing that needs to be reviewed. You need a full analysis of your various options and the consequences of each. Your options may include: do nothing and walk away, file bankruptcy, attempt debt settlement, etc. This is just a brief outline of the issues involved. I hope this helps you understand why seeing a lawyer in these types of situations is critical.

    I won't get into it here - but my law partner has written a free e-book you might want to download from this link: http://gprattorneys.com/the-whole-truth-about-b...

    The Arizona lawyers who have given their time to respond to you here on AVVO, including me, can all probably help you. So, call 2 or 3 of us and hire whomever you're most comfortable with.

    Mr. Greeves is licensed to practice law throughout the state of Arizona. His office is in Tempe. His phone number is 480-345-8100 or his email address is scott@gprlaw.net. His website is www.gprattorneys.com.

    Mr. Greeves is licensed to practice law throughout the state of Arizona. His office is in Tempe. He is authorized... more
  4. Lonnie K McDowell

    Pro

    Contributor Level 15

    Answered . If you are serious about walking away you can do a deed in lieu of foreclosure and your obligation to pay HOA dues ends once you sign the condo over. But be aware that the lender may 1099 you for the balance owed, or may try to collect the balance unless they specifically agree in writing not to as part of the deed in lieu process.

    The general advice above does not constitute an attorney-client relationship: you haven't hired me or given me... more

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