Ramifications: Not paying HOA and Property Tax

[Oxford]

Ramifications: Not paying HOA and Property Tax

My girlfriend bought 1.01 acres of land at Rancho Tehama, lot 320 in Corning, California about 6 years ago with her then boyfriend (joint tenant). She paid $11k as did he ($22k purchase price — duh). Combined HOA and Property Tax fees are $565.

The current value of the property is perhaps $2000. It is unlikely to sell as many owners have stopped paying any fees and their “investments” have been claimed by the HOA for reselling. Plus a large investor donated many acres (sites) to the local fire department so cheap (devalued) land abounds for sale.

She wants out of any association with her x-boyfriend and the property and is planning on not paying any of the associated fees. The X may stop paying as well.

She understands that the property will be claimed by the HOA and she will lose ownership (assuming the X does not pay which is likely) but is fine with that.

QUESTION: What are the ramifications of not paying HOA and Property Tax fees? (besides losing the property) Does it affect credit ratings? Any legal issues? What should I know that I don’t?

Thanks much PIGGS. Your thoughts are appreciated.

[svelte]

Can’t speak for the prop taxes, but I have been on the periphery of HOAs and can tell you how a Cal HOA *might* (and I underline might, because each one behaves differently) handle it.

If the HOA takes the property for back HOA dues and late fees, they will then check to see if there is a mortgage on the property.

If there is a mortgage and the owner is behind on payments, they will wait for the lender to foreclose since the HOA won’t be able to sell the property if there is a note against it. Since the HOA will have received no monies this way, they will likely sue the former property owner for back HOA dues.

If there is a mortgage against it and the owner is NOT behind on payments, it’s anyone’s guess as to what the HOA would do.

If there is no mortgage against the property, the HOA will sell the property and use the proceeds to pay the delinquent HOA dues. If the sale price doesn’t cover the delinquency, they may (will?) still sue the former owner the for the difference.

Please read the formal HOA docs and the Davis-Stirling section of California law for the bounds of what the HOA can do.

And I know hindsight is 20/20, but Corning isn’t a real good place to buy…my old stomping grounds are near there and we still visit often.

[sdrealtor]

Good information from svelte and in agreement with my understanding as well. In general, by my understanding the property taxes are a lien against the property and the only action they can take is against the property. So walking should not come back to her on property taxes. To the contrary, HOA dues are a personal lien. They can put a lien against the property but also can come back after her. Of course, you would want to verify this all.

[all]

Can she donate the land to fire department?

[Oxford]

Thanks guys. There is no mortgage so I guess the HOA will take it back and sell it. I spoke to the main realtor in the area and he said the HOA has dozens of properties it has taken back or in the process. Quite a mess.

Bad investment indeed. She like others got caught up in the investment hype in 2005-6 and thought about 3 seconds before investing. The property is on a grade with a few abandoned mobile homes nearby.

[Oxford]

[quote=captcha]Can she donate the land to fire department?[/quote]
That is probably a good idea. I assume there would be a tax write-off in there. But wonder what the title transfer and legal fees etc are. The whole deal is a money pit albeit a small one at the moment. She just wants it to go away with any connection to her flake x-boyfriend.

[urbanrealtor]

[quote=Oxford][quote=captcha]Can she donate the land to fire department?[/quote]
That is probably a good idea. I assume there would be a tax write-off in there. But wonder what the title transfer and legal fees etc are. The whole deal is a money pit albeit a small one at the moment. She just wants it to go away with any connection to her flake x-boyfriend.[/quote]

Just a quick fyi.
It is kind of tough to donate or sell a JT share.
You can donate (or sell) a TIC easily.
It would probably make sense for them to deed it from themselves as JT to themselves as TICs.

If they do that, then it might make sense for them to ask the HOA if they want it.

if the value is $2000 and that equals 3.5 months of HOA dues, you have a problem.

For example:
If the HOA waits a year to foreclose, then the owners are on the hook for all debt in excess of what they recovered. So in this case, they would recover 3.5 months of dues and the (former) owners would still owe for 8.5 months of dues.

I would negotiate directly with the HOA and ask them to take it for nominal compensation asap.

(like 1$ and call it even).

Also: what in the hell is the HOA doing that commands that level of fees for vacant land?

I mean thats crazy.

[sdrealtor]

UR are you hitting the wacky tabacky? Those numbers have got to be annual not monthly. They paid $22K all cash which is obvious because there is no mortgage for it so taxes are about $250/year.

[Oxford]

Combined HOA and Property Tax fees are $565. That is the annual fee.

[urbanrealtor]

[quote=sdrealtor]UR are you hitting the wacky tabacky? Those numbers have got to be annual not monthly. They paid $22K all cash which is obvious because there is no mortgage for it so taxes are about $250/year.[/quote]

No I am not stoned.

I am actually working a short in Menifee right now that works out to about that monthly (MR/HOA/Tax/Usage assessments).

But the annual thing makes sense.

I was just weirded because that seems like a lot of cash with out an actual structure attached.

But I don’t rule some thing like that out.

[Author]

Posts