Delinquent Homeowner's Association Dues: Common Excuses and Answers
- The association doesn’t mow my lawn/shovel my walk.
While it is no doubt frustrating to be asked to pay dues when you have snow on your sidewalk or when your lawn is not being mowed as frequently as you might like, it’s not a defense to not paying dues. Your obligation to pay dues comes from the Iowa Code and the recorded documents that run with the land and are binding on you as the owner of the property. Whatever problems you might have with the association are not relevant to the issue. Further, as a practical matter, consider that your association can't provide services (such as snow removal) when they don't have the money to do so. Why don’t they have any money? You (and possibly others) aren’t paying dues. Homeowner's associations generally don’t have any source of income other than what they collect in dues, and all the dues they collect go directly back to the responsibilities of the association, which may include buying insurance, street upkeep, lawn maintenance, and snow shoveling, etc. Usually, your neighbors are making those decisions, through a board of directors elected by the entire association. So, if you don’t like the frequency with which your snow is shoveled, consider running for your association’s board of directors. Refusing to pay your dues not only won't solve the problem (it will likely make it worse) but it could cost you a significant amount in court costs and fees if a lawyer becomes involved.
- I never signed a contract to pay dues.
You may not have signed a contract, but you did buy real property subject to a restrictive covenant, which is treated the same as a contract under Iowa law. The governing documents of homeowner’s associations in Iowa usually contains provisions for paying dues that are binding on everyone who owns a home in the association. Before buying any real estate, you should find out whether it is subject to any restrictive covenants. Consulting a qualified real estate agent or an attorney is a good idea. Claiming that you never agreed to pay dues is not.
- Why should I have to pay an association management company?
While you may be sending the check to your association's management company, you are not paying them. Rather, they are processing the check for your homeowner's association, and your funds check will be deposited in your association’s account. Your association, by itself, probably does not have the capability to process the many checks and pay the many bills that an association must process every month. An association management company can help accomplish that and many other things. While your association does pay the association management company a fee for their services (if you have one, not all do) a good professional management company can ultimately save your association money and add value to your property.
- The association doesn’t send me bills.
The fact that an association might not send you bills does not mean that you don’t have to pay your homeowner's association dues as there is usually no requirement that bills be sent out every month (think about your mortgage, as you probably don't receive a monthly bill for that either). However, you will likely have been contacted by the association at least once before you are turned over to a law firm or collection agency. Make sure you pay attention to all mail from your association or management company. Doing so will probably save you money in the long run. Most association boards don’t like to sue their neighbors, but may do so if they don’t think you will pay otherwise.
- My dues were supposed to be paid out of an escrow account.
On occasion, homeowners are under the impression that an escrow account was supposed to pay their condo dues, but find out that they are in collections because that is not being done. If this happens, you should contact your escrow agent or mortgage servicer and make sure that your homeowner's association dues are escrowed and that payments are being made in a timely manner. The obligation is always on the homeowner to pay condo dues, and no one else is required to pay them, including a mortgage holder. However, there are occasionally misunderstandings and being proactive about the situation can usually get things resolved in a way that’s favorable for everyone.
- My builder was supposed to pay my dues.
Sometimes, homeowners who purchase a new condominium, townhome, or single family home receive an incentive from a builder or developer who agrees to pay for an initial period of association dues. If you purchased your property under such an arrangement and the builder or developer is not living up to it, you may have a legal claim against that party. However, again, only the homeowner is responsible for paying condo dues under the law. As such, the important thing here is that you make sure you understand exactly what you are buying when you buy real estate. Especially real estate subject to a homeowner’s association.
- I don’t have any money.
The fact that you do not have any money is not a defense to the question of whether you owe the money. It may be relevant to the question of whether and how you can pay the money that you owe. Keep in mind that in most cases your neighbors (and even collection firms or attorneys) are sympathetic to tough economic times so being proactive may be in your best interest if your situation is temporarily. But ultimately, if you can’t afford to pay the dues, then you can’t afford to live in the association.
- The association won’t accept my payment plan.
Associations are not required to take payment plans unless they are imposed by a court. Associations may agree to take a payment plan, but they are not required to do so. Your association may be more inclined to take a plan if you make a good faith effort to pay as much as you can and address your account before it becomes seriously delinquent.
- I’m getting foreclosed on by the bank.
The fact that you may be getting foreclosed on by your mortgage lender is not a defense to your obligation to pay association dues. You have to pay the dues as long as you own the property. Generally, if a residential foreclosure in Iowa on your property goes through to the end, you own the property until it is sold at a sheriff’s sale. If you are seeking to avoid foreclosure by arranging a short sale or other remedy, it is in your interest to make sure outstanding condo dues are paid off in the transaction.
- I’m not going to pay because there’s nothing the association can do about it.
If, despite reading all of the above, you decide that you still don’t want to pay your condo dues, you should know what remedies the association has. An association can file a lawsuit against you for the money owed. If the association gets a judgment in its favor, it may be able to garnish your wages, garnish your bank account, or levy on your property until the judgment is satisfied. The judgment may show up on your credit report. The association also has a lien against your property in the association for the money owed. The association may choose to foreclose on that lien, forcing the property to be sold so that they are paid off. These remedies may not necessarily be applicable to your situation, and you may have defenses to any or all of them. But you should know that Iowa associations may use them against you if you fail to pay your dues.