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Understanding HOA fees, assessments and penalties

California residents who are members of a homeowner's association are probably fully aware that if they fail to pay their dues, they will face hefty penalties. In fact, some HOA boards will threaten foreclosure even if the member has been paying his or her mortgage payments on time. Then, if the HOA board hires an attorney, the member's penalties could be significantly increased.

After one California HOA member family defaulted on their dues and assessments, the board charged them an additional 350 percent of the unpaid dues in fees. This brought their total to more than $11,000. In order to keep their home from foreclosing, the member was able to arrange a payment plan, even though the board was not obligated to offer a settlement of any kind.

Generally, HOA regular and special assessments are considered late if payment is made 15 days after the due date. Under Civil Code section 5650, the association board can charge for reasonable costs of collection, which could include late charges, interest and legal fees. If HOA members are unable to make a full payment of what they owe, or if the association board refuses to reduce the amount owed, they may be able to suspend the collection costs and interest on the payments. Members in this situation may even be able to renegotiate these charges at the end of their payment plan. Otherwise, if a one-time payment can be made, delinquent members would be able to avoid accruing interest charges.

It is important for those considering a membership in an HOA to research all the costs, which typically include assessment dues, emergency-related assessments, and potential penalties and fines. In the event an HOA dispute arises between a board and a member, the member might want to obtain legal advice on how to handle the issue.

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