Dealing with HOA and Condominium Association Assessments

It has been estimated that around 80% of all new homes are part of a condominium or homeowners’ association. There are good reasons for the popularity. Associations (when properly run) can make sure that the common areas of a development are maintained and relieve homeowners from some of the common maintenance obligations of home ownership. Of course, there is at least one major downside: assessments (sometimes called “dues”).
A brief primer on the law of assessments
There are two laws in Pennsylvania that govern common interest communities (“common interest community” is a terms that refers to both condominium and homeowners’ associations). Pennsylvania’s Uniform Planned Community Act (68 Pa. C.S.A. § 5101, et seq.) applies to homeowners’ associations in Pennsylvania, and Pennsylvania’s Uniform Condominium Act (68 Pa. C.S.A. § 3101, et seq.) applies condominium associations. The relevant provisions of each of these laws are very similar.
Under each act, an association is required to draft an annual budget and apportion a share of the budget to each homeowner. The share can be based solely on the number of homes or it can be based on other factors, such as square footage. Each homeowners’ share is of the association’s budget is the “common expense assessment” and is collected annually, quarterly, or monthly, depending on the specific governing documents of the association.
If a homeowner does not pay their common expense assessment when it becomes due, then the law provides the association with a lien against the home. It’s that simple. An association does not need to file a lien or other document to perfect its security interest. If the assessments remain unpaid, then an association can take legal action to enforce its lien. If an association does take legal action, the law allows the association to also collect the attorney’s fees and other costs that it incurs in doing so.
Methods that an association can take to enforce its lien.
The law allows associations to foreclose on liens in the same manner as a mortgage foreclosure. This is generally uncommon, however, because most homeowners have a first mortgage. Under both the UPCA and UCA, an association’s lien is subordinate to a most first mortgages; therefore, there is often not enough equity left in a home after the first mortgage to justify the costs of a taking the home to foreclosure sale.
More frequently an association will file a civil lawsuit seeking a personal judgment against the homeowner. This suit can either be filed in a District Court (small claims) or the Court of Common Pleas. If the association obtains a judgment, then the association can take a number of steps to try and collect the judgment from a homeowner. These steps include selling real estate at sheriff’s sale, garnishing bank accounts, or levying the homeowner’s personal property.
If I am behind on my assessments, what can I do?
Whatever you do, now is not the time to bury your head in the sand. First, you should be aware that you have the right to make a written request to your association for a statement of your assessments. Section 5315 of the UPCA and Section 3315 of the UCA both require that an association furnish a statement of unpaid assessments within 10 days of a written request. If you send a written request to your association, send it using a method that can be verified, such as certified mail, fax, or email. And, of course, always keep copies. Under the law, this statement is binding on the Association once it is issued, so an association cannot go back later an change the statement once it is issued.
In addition to obtaining a copy of your statement, you should keep in communication with your association. Avoiding past-due assessments won’t make the problem go away. In fact, if you ignore the problem there is a high likelihood that the assessments will be referred to an attorney for collections. This can result is hundreds or even thousands of dollars in additional legal fees being added to your account (remember, the UPCA and UCA allow an association to collect their reasonable attorney’s fees incurred in collecting assessments).
If you can, trying requesting a payment arrangement with your association. Often times, an association may agree to waive late fees and interest if you can make good on your payments.
Thinking about disputing your assessments in Court? Be careful. Be very Careful.
Associations aren’t perfect, and can fall short of their responsibilities to maintain the Association. Often, homeowners use this to justify withholding their assessments and attempt to use this as a defense in court to an associations collection lawsuit. Under Pennsylvania law, however, a homeowner’s obligation to pay association assessments is separate from the association’s obligations to maintain the community. This means that even if your association is shirking its responsibilities, this defense won’t win the day in court and you will probably be stuck paying the association’s legal bill…in addition to your past-due assessments.
How can an attorney help?
If you are considering litigating your past due assessments, you should always consider consulting with a knowledgeable attorney. Always remember that the association will likely add all of the legal fees it incurs to your account, so it is most likely in your best interest to minimize all litigation with your association. An attorney may also be able to recommend alternative methods of dealing with your assessment issues, such as restructuring your debts through a Chapter 13 bankruptcy petition.

Still have questions about your HOA or Condominium assessments, call the Mays Law Firm (215) 792-4321 to schedule your free consultation.