What legal action can an HOA take to collect a debt?

HOAs have the power to pursue civil lawsuits against non-compliant homeowners. This can include actions for specific performance of covenants (i.e., an order from a judge directing the homeowner to act as required by the declaration), an injunction against further violation (i.e., a court order to cease violations), or a simple collection suit for unpaid assessments.

Additionally, HOAs almost always have the right to record assessment liens, which, if not paid, can be foreclosed upon. HOA foreclosures are usually conducted judicially under a judge’s supervision, but a few states, including North Carolina, permit non-judicial foreclosure by HOAs. N.C.G.S. §47F-3-116(f).

Can the HOA take money from an owner’s paycheck or bank?

In general, an HOA can only garnish a homeowner’s wages or levy a bank account if the HOA has already obtained a civil judgment against the homeowner, and the applicable state allows garnishment of wages or bank levies.   

So, before a garnishment or bank levy can be pursued, the HOA must institute a collection lawsuit and obtain a judgment order from the court. While most states allow garnishment after a civil judgment has been entered, a few, such as Pennsylvania, do not. 

Can an owner’s federal benefits be garnished?

Although Social Security, SSDI, and similar federal benefits can be attached in a few limited situations, the money usually cannot be reached by HOAs. Under federal law, only certain creditors can garnish Social Security and other federal benefits.  

Most notably, the IRS and other federal agencies can attach the funds to recover delinquent taxes and some other debts owed to the government—and benefits can be garnished to pay outstanding domestic support obligations (like alimony or child support). However, most private civil creditors such as HOAs cannot reach federal benefits.

What can owners do if the HOA files a lawsuit?

Anyone served with a lawsuit should consider retaining an attorney. If a homeowner contests the HOA’s allegations, an attorney can help defend the homeowner’s interests and present the case in court. Alternatively, if homeowners do not contest the claims asserted by the HOA, an attorney may be able to help negotiate a settlement.

Some state HOA laws afford homeowners a right to request non-binding mediation before formal litigation. For instance, in non-collection cases involving HOAs, Texas law gives either party a right to compel mediation, and the parties can always mutually agree to attend alternative dispute resolution. Tex. Prop. Code § 209.007(d) and (e). Similarly, Florida requires pre-suit mediation of all disputes other than for non-payment. Fla. Stat. §720.311(2)(a).

 

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