By Deborah Goonan, Independent American Communities
Attention HOA owners and home buyers. Did you know that your Association may be able to foreclose on your home for small amounts of past due assessments — even as little as one missed annual payment of less than $100?
As ABC Action News reports, it can happen to anyone:
Missing a simple HOA fee could lead to losing your home
Legally little can be done
There’s more to the story: Panther Trace is a CDD
Now to add some perspective, the reader needs to know that Panther Trace is also organized as a Community Development District (CDD), a special purpose local government entity, in the state of Florida. The CDD handles all of the maintenance of community infrastructure and amenities. (See this link to Panther Trace CDD for reference.) The costs for CDD services and bonds used for original construction become part of a homeowner’s property tax bill.
The primary distinctions between a CDD and a municipal government are that, in a CDD, unlike a typical town or city government:
- Homeowners pay back bonds issued at the time of construction or expansion of the community. These bonds are used to construct roads, a storm water control system, recreation and security amenities exclusive to the community. Homeowners also pay for ongoing maintenance of their exclusive community features.
- A CDD is controlled by a developer-appointed board of supervisors for the first 6 -10 years, as specified by Florida Statute 190. After that, the board of supervisors is elected publicly by regsistered voters of the CDD.
So…Panther Trace has a CDD and HOA
Now, some of you reading this may be thinking that there’s really no need for a homeowners’ association as long as the CDD exists to take care of common area maintenance and insurance.
But, in the state of Florida, almost all CDDs also have an HOA (sometimes called a Property Owners’ Association), whose sole purpose is to enforce Covenants, Conditions and Restrictions (CC&Rs) and Architectural Controls. In other words, the HOA’s only duty is to enforce rules governing the appearance and use of your home and yard. That’s it.
For that “service,” according to the report linked above, Panther Trace HOA owners are assessed $75 – $80 annually. That amounts to less than $7 per month.
And yet, for such a relatively small assessment meant to cover non-essential services, the Panther Trace HOA has the power to foreclose on a home, potentially leaving the owner homeless, over a debt that amounts to less than 1% of the value of the home.
So, if you think that a homeowners’ association with very low assessments is somehow less restrictive and more benign than a full-service HOA in a master planned community, think again.
The HOA has more power to foreclose than the CDD or municipal government
And here’s something else to consider. In Florida – and virtually every other state in the US – your HOA can legally move to foreclose after as little as 45 to 90 days beyond the first delinquent payment.
Now, if you compare FL HOA statutes to the state’s laws governing collection of municipal taxes, you will note one glaring difference. The municipal government cannot move to foreclose on assessment liens for at least one to two years. See for yourself.
(Click on image to enlarge.)
And checking FL Statute 190.026, a CDD has to wait one year until beginning the process of foreclosure over unpaid CDD assessments.
Makes you wonder: What is the thinking behind making HOA foreclosure so quick and easy, especially with assistance from the property management team and the HOA attorney?