A homeowners association is a volunteer organization developed to maintain the community. When a homeowner purchases a property that has an HOA, there are certain rules and requirements she must obey. The HOA has a right to impose fines and collect dues. If you are renting a home in a community with a HOA, it is the landlord's responsibility to ensure she is in compliance with the requirements set by the HOA. When the landlord stops paying dues, the HOA has a right to foreclose. Although the owner is breaching her contract with the HOA, you are still obligated to pay rent.
Lease Agreements During Foreclosure
If a landlord isn't paying his HOA fees, the HOA may initiate the foreclosure process. While a home is in foreclosure, you are required to continue paying your rent if you have a lease agreement with the landlord. The landlord remains the legal owner of the property until the foreclosure is finalized. Under the Protecting Tenants at Foreclosure Act, you have the right to finish out the duration of your lease if the home is foreclosed before it expires. If you have a month-to-month lease, you can stay in the property for 90 days after the foreclosure.
Rights After Foreclosure
After a foreclosure, you do not have to stay in the home. When ownership changes, the lease agreement is null and void. If you choose to remain in the home until your lease is up, rent is paid to the new owner. The HOA can become the landlord if the foreclosure was due to unpaid dues or fees. If the owner stopped paying the mortgage along with the dues, the lender may assume ownership and attempt to sell the home to recoup the loss.
If the owner is behind on dues, you may worry about the possibility of an eviction by the HOA. In most states, the HOA's remedies are against the homeowner, not the tenant. However, in the state of Florida, the HOA can actually collect the rent and apply it toward the unpaid dues. To intercept the rent, the association is required to make written demand on the tenant. The HOA must send a copy to the landlord and can collect rent only to the extent of the unpaid fees. If the tenant does not pay, the association may act as the landlord and evict the tenant.
A better alternative to withholding the rent is establishing an escrow account. Although unpaid HOA dues is not a valid reason to withhold rent, you can withhold the payment if the landlord isn't maintaining the property. Deposit the rent in the escrow account until the repairs are made. If you can't locate the landlord, the lender may choose to collect the rent you set aside. In all states except Michigan the lender can demand the tenant pay the bank, rather than the landlord. The lender must give written notice to the tenants, typically in the form of a letter, either delivered or posted on the property.
- Rajtar & Associates: Renters Can be Commanded to Pay Delinquent Association Maintence Fees
- SMG Law Firm: Associations Can Collect the Rent When Owners are Delinquent in Their Assessments
- Nolo: Tenants Caught in Foreclosure - Who Gets the Rent?
- Realtor: The House We Are Renting Is In Foreclosure, What Do We Do?
Jeannine Mancini, a Florida native, has been writing business and personal finance articles since 2003. Her articles have been published in the Florida Today and Orlando Sentinel. She earned a Bachelor of Science in Interdisciplinary Studies from the University of Central Florida.