So here’s the cute
Frisco town home Ray Nagin is
about to lose for $1500 — it’s up just north of Lebanon Parkway, a hefty stone’s throw from IKEA. The Mayor of New Orleans obviously doesn’t know that Texas has some of the strongest homestead laws in the country, which protects us from creditors, and sometimes spouses. In 1837, in fact, a property could not be sold without both the husband’s and wife’s signature! There are five ways you can lose your home in the Lone Star state: Failure to pay taxes of any kind — federal income taxes, property taxes; mechanics liens, when you fail to pay a workman who has done work on your house provided he correctly files a mechanics lien; purchase money mortgages — in other words, failure to pay your mortgage; failure to pay homeowners maintenance fees,
a topic hotly debated in Austin right now; and failure to pay home equity loans borrowed against the homestead. Unlike other states, Texans may only borrow up to 80% of the equity in their homes, another reason why our market is a heck of a lot healthier than most.
Candy,
I am confused by your statement, “Texans may only borrow up to 80% of the equity in their homes.” How did all of these people I know do 0 down, 80-15-5, or 80-10-10 mortgages? I am honestly asking this question.
Thanks!
The 80% limitation relates to home equity loans, not initial purchases of a home.
“Cute” … Seriously?
Cute?
Well, it’s cute if you don’t have a job nor a home. Seriously!
HOAs were basically begun to ensure that neighborhoods were kept aesthetically pleasing. Condos and high-rises are a bit more demanding but a person’s Homestead should not be taken away from them for HOA fees.
Homeowners should be allowed “sweat equity” and the opportunity to work mowing, cleaning, etc. if they are unable to pay for the short term- especially during economic crisis rather than liens automatically being accessed.
@Lisa
Sweat equity? Are you serious? So you are suggesting that if my neighbor can’t pay his bills he should be able to, I dunno, valet park cars in exchange for not paying HOA fees? I’m pretty sure the janitorial staff, valets and such like to receive their paycheck to put food on their table.
I agree with Lisa concerning sweat equity. This option should have certain parameters and guidelines but it should definitely be an option on the table. Sometimes during desperate times, desperate measures have to be taken.
Without a doubt some high monthly HOA fees are high directly, and indirectly, due to valet parking ( a rather costly, worthless, and dubious amenity ), and 24-hour concierge services. Add into the equation shoddy construction ( requiring ongoing special assessments which depletes the reserve funds ), HOA mismanagement, and an owner might be looking at a monthly HOA fee of $600. Possibly more!
Nationwide, it’s not that unusual to see forclosed condos listed for $85,000 with monthly HOA fees of $700 and up.
I know of two townhome HOA communites with monthly fees of less than a $100 a month. They both run a tight ship. One HOA community is rather small, and it does not have a pool and security gates like the other one, but each owner is actively involved in the day-to-day operation of the the complex. Consequently, the monthly HOA fee is something like $40 a month.
But I like having valet and a 24 hour concierge and a pool, I can afford to pay for them and I knew their monthly cost before I bought my condo as did everyone else.
You’re suggesting that the things I am willing and able to pay for and promised to me when I bought my condo should be scaled back or eliminated because someone else can’t pay for them even though when they bought their house they committed to paying for them.
If you want a place with low HOA fees and each homeowner involved in day-to-day operations, buy a place with such a setup but I don’t care to live in a place like that and it is unfair to me to be forced into that kind of situation against my will because a few people can’t pay their bills.
I’m sorry, but that is ridiculous and unfair to me. It’s unfortunate that sometimes people lose their houses but that is the reality of some unfortunate circumstances.
Having been on the board of a couple of HOA’s, I can say that there are many people who simply don’t WANT to pay, or pay their HOA last, thinking there are no consequences. We had to consistently start enforcement procedures against a couple of homeowners over and over again – they would finally pay up what they owed. Then start the process all over again. Since it was a small building, every time someone didn’t pay their monthly dues, it had an immediate impact on the bills the HOA had to pay. Sadly, having the ability to enforce foreclosure was the only threat these people understood, and the only way we could get them to pay.
I don’t believe foreclosure should be done except as a total last resort, after ALL other options have been exhausted. But if you can’t afford to pay the HOA dues (which you signed up for when you bought your home), then maybe you need to sell and move. It is not the responsibility of the entire neighborhood or building to carry your debt.
John M, a few of my relatives own condos, so I have a little exposure to condo living.
No, I’m not saying amenities should be eliminated. But condo amenities, bylaws, and covenants are not always set in stone.
Certain amenities like valet parking and concierge services are very nice amenities but they are expensive. A high-rise condo with 400 units would almost certainly require a concierge 24-hours a day. Valet parking is a different story. That’s not so much a necessity.
Through the years, I’ve learned that condo convenants and amenities are subject to change. Sometimes small and sometimes not so small. When a person buys a condo, don’t assume every rule and regulation will be the same in future years.
For example, a person buys a condo as an investment to lease it out. A month after the purchase, the condo association totally bans leasing. No exclusions due to financial hardship.
Say you inherit your deceased mother’s condo. Your mom paid $300,000 three-years ago, when leasing was allowed, and now it won’t fetch $150,000. You’re stuck. You can’t rent it out until the condo market improves, so you’re forced to take a huge hit.
For example, the condo association changes the pet ownership rules. The previous two dog limit is now only one dog and the dog must not weigh over 25 pounds.
Financial hardship is hitting this nation very hard and containing monthly HOA fees has been difficult with rising foreclosures and insurance costs.
I was just reading the other day on the Internet about rising insurance costs in Florida. One Florida HOA association was paying something like $38,000 a year for insurance and now they’re paying $150,000 a year. Consequently the HOA fees went up around $200 a month. No doubt many of these condo owners are retired with reduced incomes.
I’m sure many Florida HOA associations are running a tighter ship now. If an HOA association was paying $30 for a guy to come out and change a light bulb in a hallway, maybe they’re paying $15 now. Or maybe a senior citizen, earning 1.75 percent CD interest, would be willing to do it to lower his monthly HOA fees.
Modterm, I agree with everything you say.
I’m not that familiar with small condo complexes. I’m more familiar with large condo complexes and management companies that run 50 or more complexes.
I guess there’s always going to be a few deadbeats around. But today many folks are hurting financially. From what I’ve read, many families have a cushion of about one or two paychecks and that’s it. Normally these folks have paid their bills in a timely manner.
I do think sweat equity could be a short-term solution for some condo owners, but in the end the chips have to fall somewhere. Currently, there’s a lot of pain in the world, and we all know life can be very cruel.
Nagin has said he has the Benjamins to pay the HOA fees and he’s quite angry at the print and news media for their obsessive, unrelenting coverage of this story. Nagin is a public figure, so there’s going to be lots of press coverage. Duh!
Harry Truman said, “If you can’t stand the heat get out of the kitchen.” That’s easy for Nagin now, because he doesn’t have a townhome kitchen to get out of.
Our problem in a community of 24 was that one or two people would consistently delay payments, and would also make no effort to communicate with the HOA management company or the Board – either because of arrogance or embarrassment. Due to the small size, that could totally wreck the HOA’s finances.
At one point we discussed the option of having residents do some of the maintenance or upkeep at the property, but I believe that was not feasible due to insurance concerns.
I’m sure there are two sides (or more) to every story, but whenever I read about someone losing their home because they didn’t pay a $25 HOA bill, I find that highly suspicious. I also know, though, that there are some HOA boards that are power crazy and get carried away. Maybe some protections could be put in place that would require approval by the total membership of an HOA and not just the Board in order to complete a foreclosure for non-payment.
modterm, I nod my head in agreement.
Something doesn’t add up with this Nagin story. Nagin has stated he has the money to pay the delinquent HOA fees, so there’s other reasons as to why he’s saying goodbye to this townhome. I don’t think the public is getting the entire story and that’s perfectly okay. Sometimes it’s better not to tell the entire story.
Yes, some HOA associations are power hungry.
I think most condo/townhome owners are assessed a late fee if they don’t pay their monthly dues by a certain day of the month. I suppose the percentage varies. From what I hear, the late fee is around 8 to 10 percent.