Question on HOA SOLs

[KnewBee]

HI, been searching all over the Internet for an answer to this and wondering if any of the good people on here know the answer. Stopped paying for my condo and HOA on 3/08 and moved. Didn't realize it would take the bank 18 months to foreclose. Bank foreclosed on 12/09 and HOA is trying to collect 12k in unpaid association fees through a collection agency. In California SOL is four years. 

Does anyone know when SOL starts?

Searching the Internet I have found 3 different answers which all sound reasonable. 

1. It started from DOFD 3/08

2. it started when bank actually forclosed on 12/09

3. Each month your homeowners association fee is due prior to actual bank foreclosure has its own SOL. So monthly HOA Fees from 3/08 to 10/08 are currently outside of SOL, but the remaining HOA fees from 11/08 to 12/09 are still in SOL. 

im curious because collection agency keeps soft pulling me and wondering if they can still sue. Would anyone happen to know which of the 3 answers is correct? Thanks! 

[Shogun]

I think it would be option 1.  It's a recurring fee, not individual accounts so 3 would be out.  You stop payin in 08 so that would start the DOFD clock.  I could be wrong but that's how I interpret it.

[chasmith]

This doesn't make sense to me but may be a difference in state law.  In Texas, where I was Treasurer and then President of an HOA, the HOA fees are a mechanics lien and superior to even the first morthahe.  The HOA should have collected from the bank before the bank got clear title if the lien was superior.

[StartingOver10]

^^^Our state's statutes are similar to yours in Texas. Here in Fl the HOA fees are easily converted to liens on the property. Those liens are superior to the first mortgage. The HOA can foreclose on the lien very, very quickly. In fact it is frequently done here (the foreclosure) even if the house is worth substantially less than the outstanding mortgages. Then the HOA will rent out the property to recoup fees until the bank forecloses. In the meantime the HOA also obtains a judgment against the homeowner that survives the foreclosure.

Back to the OP's question: check your states statutes. I know here that if the HOA gets a judgment then the judgment is good for 10 years and can be renewed. The process is very easy for the HOA to get the judgment. California may have different regulations.

[KnewBee]

The other night I spent several hours researching and could not come up with a clear answer even based directly on the California State law. It just said 4 years from breach of contract which in my mind is 3/08. The credit report shows this collection account as coming off my credit report 7 years from the date of forclosure so I am guessing the collection agency would argue that the date of first deliquency was the forclosure date. I understand the SOL is different from the reporting period, but I bet they would argue DOFD was forclosure date for both SOL and reporting period. I would argue it was the last day I made a payment. Not sure who is right or if there is even any case law going one way or the other. 

As to why the HOA didn't go after the bank for this I did a lot of research on that too. What I found was that in complexes hit hard by foreclosures, the HOAs wanted to get new owners in as soon as possible so they didn't lose new HOA fee revenue moving forward so they were generally not interfering with the banks. The banks didn't  want to forclose because they didn't want to take on the HOA  fees and there was a glut of forclosures at this time.  At my complex the HOA and the complex was mess. Value had dropped 70%. HOA was not taking care of even basic  issues like cleaning trash on the ground or fixing the automatic gate to drive in and out of the complex, so I don't think they were organized enough to try to rent the place. At that point I just wanted out so that is why I let it forclose and didn't fight harder to keep it. They have not tried to sue me,  or obtain a judgement, and I am not going to do anything with this until forclosure date is over 4 years to be on the safe side, unless they come after me before that. 

[chasmith]

So if you're sued, in addition to asserting SOL as a defense, you should assert that the HOA failed to mitigate its damages.  It was entitled to collect from the bank and chose not to, to its detriment, not yours.

[KnewBee]

Thanks Chasmith. In researching this for similar situations here in California on some legal and real estate websites it seemed the consistant legal opinion was the homeowner is responsible for the dues themselves up to the foreclosure date. It was just never clear about the SOL as everyone raising the issue was going through forclosure currently where mine is much older. Good ammo though. I just have about one more year before there is no question at all about the SOL and then if I have not been sued I will dispute this collection and the reporting period on the credit reports based on reporting longer than 7 years from date of first deliquency.