Unraveling the Web of HOA Hassles: How AI Legalese Decoder Can Help Unwind Foreclosure Threats for Non-Participating Homeowners
- June 26, 2024
- Posted by: legaleseblogger
- Category: Related News
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Uncovering the Truth: A Homeowner’s Surprise HOA Encumbrance
The Initial Discovery
I purchased my home in 2019, and during the entire process, we were told that the neighborhood was not under the purview of an HOA. This information was crucial in our decision to buy, as we have a project car, a big dog, and exotic pets that could potentially be frowned upon by HOAs. No membership of an HOA was discovered or disclosed to us during the underwriting process, and we were not asked to sign membership documents, provided with laws or rules to abide by, or pay fees or membership dues as part of the closing costs. There are no indications of HOA membership in our deed/title, closing disclosure, or mortgage statements.
The Surprise Revelation
A few months ago, when construction started ramping up in our neighborhood, a sign went up at the entrance to the subdivision stating that this was a "covenant-bound" neighborhood managed by a property management group in town. We also started receiving letters from the management group stating that our fence needed to be stained and we were now accruing fines. This was the first indication that we were part of an HOA, and we were unaware of this covenant-bound status.
The Threat of Legal Action
Last week, I received a letter from the management company’s lawyer claiming to represent a neighborhood HOA, demanding payment within 14 days or they would proceed with actions that could include a property lien, foreclosure of the property, notifying my mortgage holder that I was in default of payment to the HOA, and suspension of voting rights. If I do not respond to them within 30 days of the mailing date, they will presume the debt to be valid. I checked with my county, and there is a HOA for my subdivision, established in 2010. Again, this was not mentioned to me at all during the homebuying process and I was never provided with membership documents or requested to pay fees at closing.
Seeking Help and Clarity
I opened a claim with my title insurance company the following day, providing them with copies of the fence complaint letters, the legal notice I received, my deed/title, my closing disclosure, and my most recent mortgage statement. They provided me with a claim number, but I have not heard back since. I asked if I should respond to the legal notice, but the title insurance company has not responded to me. I am seeking guidance on how long a title insurance claim typically takes and whether I should wait for them to investigate or take further action.
How AI Legalese Decoder Can Help
AI Legalese Decoder is a powerful tool that can help homeowners like me navigate complex legal documents and understand the nuances of HOA agreements. By using AI Legalese Decoder, I can:
- Identify potential issues and red flags in the HOA agreement
- Understand the implications of the HOA’s demands and threats
- Determine the validity of the HOA’s claims and demands
- Develop a strategy for responding to the HOA and potentially negotiating a resolution
- Identify potential legal recourse and next steps
Next Steps
I am still awaiting a response from my title insurance company, and I am considering retaining legal counsel to help me navigate this situation. I am torn between waiting for the title insurance company to investigate and taking further action to address the HOA’s demands. I would prefer not to make a bad situation worse by doing nothing, but I would also prefer not to empty my savings to meet these legal demands, especially if they are baseless. I am seeking guidance on the best course of action and how AI Legalese Decoder can help me achieve a favorable outcome.
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It seems very unusual that this was not discovered by the title company while you were under contract.
-There would be a HOA clause addendum to your mortgage docs that you should have signed.
-It should show up on the title search.
-If there were dues, the title company should have provided the account status and prorated the balance.
>Was it incumbent upon me to do my own research and seek out this HOA on my own upon buying my house?
Ultimately, it may have been. Contact an attorney for sure. Expect to pay for several hours to research your situation.
>I checked with my county, and there is a HOA for my subdivision, established in 2010. Again, this was not mentioned to me at all during the homebuying process
Was it “not mentioned”, or was it clearly denied to exist by agents or title company? There’s a difference.
You’ve ostensibly done everything right so far. Contacting the title insurance company was the correct first step, and the title company should be assigning you legal council as part of the claim process, but I’m not sure what the time frame on this would be. If you don’t have a copy, you may want to contact your real estate broker and get a copy of the title report that was done when you bought the house.
This could be a situation where the HOA is hoping they can scare you into opting in with scary letters and threats. You shouldn’t contact them until you’ve had a chance to talk with a lawyer.
For your peace of mind, it might be a good idea to pay out of pocket for an hour or two of a lawyers time to talk about the situation.
Oh, boy, it is kind of the wild west out in Alabama on HoAs: [A basic Alabama HoA FAQ](https://www.sos.alabama.gov/business-entities/homeowners-associations/hoa-faqs)
Anyway, you should probably retain legal counsel. They’d have a much better idea what your odds are of prevailing in a suit.
They’re trying to comply with
Alabama Code 13A-9-12
Which discusses penalties for a false lien.
At minimum you should read that and reply contesting it and making them prove you are in the HOA and the lien is valid
If they do not prove the lien is valid and continue to assert it then there are criminal charges.
Ideally a lawyer would do this. Do it ASAP as you only have 14 days.
NAL – If OP pays, could that be considered him joining the HOA?
Ideally you would have notified your title insurance as soon as you got the first HOA letters. Now you’re scrambling to respond in 14-30 days and there’s no guarantee that the title insurance will get back to you fast enough.
You want to be very careful about anything you say to the HOA, but at the very least you could tell them that you’re not aware of being part of the HOA and ask them to send evidence that your property is included. This is better than not responding at all. They’re the “enemy” but they might be willing to give you more time. So far they’ve heard nothing from you and that’s why they’re escalating, to get your attention.
You can decide if you’d rather talk to a lawyer first. (It would be safer but might cost you.) You should definitely talk to a lawyer before paying anything to the HOA or saying anything that can be construed as acknowledging the debt.
Check the county recorder for your property records. ALL CC&R’s, HOA enrollment, Bylaws, liens, etc that apply to your specific parcel will be recorded there by law.
Step 1. Review this with your lawyer that handled titles, deeds, escrows etc at time of purchasing.
Step 2. Get another lawyer to review this and your options.
I would also jump to Step 3, of aggressively suing them for fraud and harassment. They probably want people to roll over and give them money. But I enjoy conflict. YMMV.
The last thing you received has the hallmarks of being a precursor to a lien where they are federally required to acknowledge that you can ask to verify the debt. So if nothing else, and your title company won’t get on the phone, Ask for a verification of debt. You can usually find an example letter online that will do if you search “verification of debt letter Alabama”. Doing that will at least give you more time. Otherwise, do everything you can to get your title company on the phone and maybe retain a lawyer with experience in HOAs.
Get all your documents from buying the house and contact a real-estate attorney. Have them dig into it.
Have a lawyer send a letter to the HOA before the 30 days informing them that you are not part of the HOA.
> I checked with my county, and there is a HOA for my subdivision
There’s a chance that while most of your neighbours are in the HOA, while your property is not, and this management company is trying to trick you into joining. Do not pay them anything until they have proven to your lawyer’s standard that you are in fact in the HOA.
NAL- in some states, if you purchase a foreclosure you are not required to join the HOA where otherwise you would be. It’s possible the people that bought it in foreclosure before you opted out of the HOA and the HOA still thinks your residence is part of it
If it’s not on your deed it doesn’t exist. Do not interact with the HOA at all. Retain an attorney and let him deal with this.
Interesting you’re barely finding out about this. Were you not receiving these notices in the mail? All this should have been known by your real estate agent. The contract ships have disclosed that the property is in an HOA. I’d sue the agent for not disclosing this.
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I know in Indiana an HOA has to give you their rules and regulations within 30 days of purchase or you don’t have to abide buy them. I don’t know about your state though.