Wednesday May 13 2009
Homeowners association threatening foreclosures
By: Brandon Darnell, News Messenger Reporter
Lincoln Crossing residents have recently begun receiving notices of intent to foreclose – but from the homeowners association, not the banks. “Basically, I was appalled that they would do this in today’s crisis,” said Pam Spanier, one of those residents. Spanier received a letter dated April 27 from the collection agency for the Lincoln Crossing Community Association stating that she needs to pay the sum of $2,100.52 by June 2, or foreclosure proceedings will begin. The mandatory dues to the association are $115 per month, Spanier said, and she has not been able to pay them for the past five months, and she lost her unemployment benefits last month. Spanier, a mother of three, said she lost her job in December, 2007, and has not been able to find work in the meantime. She recently got a loan modification for her house, but when she talked to the community association, she was told she will have to pay $250 per month on a payment plan to make up for the months she has not paid her dues as well as various fees. “If I can’t pay $115, how can I pay double?” Spanier asked. “I don’t have the money.” According to Spanier, she only owes $600 in dues, but the additional fees make up the difference between that $600 and the balance of her account, which is $2,100. “I’m disgusted that this group of people can sit there in this economy and try to foreclose on a family of four for basically $600,” Spanier said. David McCray, president of the Lincoln Crossing Community Association, said he recognizes the hard times, but stressed that the association must fulfill its budgetary obligations, and giving homeowners a “free ride” isn’t an option. “We do expect people to pay their association fees, which are $115 a month,” McCray said. “We are one of the few associations that set up payment plans.” According to McCray, about 60 homeowners in Lincoln Crossing are currently paying back their debts via payment plans. Homeowners associations became prevalent after the passing of Prop. 13 in 1978, which capped real estate tax increases, according to Curt Sproul, a Roseville-based real estate lawyer practicing since 1973. In order to fund common-use areas such as some parks, golf courses and other facilities, homeowners associations are allowed to collect dues under law, regardless of whether the homeowners use those facilities, Sproul said. Just like taxes, homeowners are obligated to pay those dues, and the associations have a legal right to enforce that collection, according to Sproul. That includes foreclosure proceedings. “Most of the time, it’s just a good, effective threat that, under law, they have the right to foreclose,” Sproul said. There are many safeguards under the law to protect homeowners from actually being foreclosed on by their associations, Sproul said, and those include meetings with the association board, setting up of payment plans and the fact that nothing can be done until at least 90 days after the letter of notice is served. “We’ve never foreclosed on anybody,” McCray said. “That’s not to say we won’t, but we haven’t.” At the heart of the matter, McCray said, is making sure that the association will be able to recoup the unpaid fees if and when the bank forecloses on the homeowners. “If we have the liens out there, when the house sells, that is part of the escrow, and we get it back,” McCray said. The fees pay for a variety of services in the association, according to McCray. Those services include internet, landscaping, janitorial staff, security patrols and the operation of Club Lincoln, the fitness facility open to residents of Lincoln Crossing. McCray said Spanier is not alone, as about 300 homeowners are in various stages of getting behind on their payments. “About 10 percent (of the homeowners) are either skipping payments or have been foreclosed on by the banks,” McCray said, adding that there are approximately 3,000 homeowners in Lincoln Crossing. “The bottom line…we’re not a charity here,” McCray said. “We’re a business just like any other out there. We’ll work with them the best we can.” Mary MacDonald is another homeowner who received a notice of intent to foreclose April 27. “I’m 80 years old, and this gets me very upset,” MacDonald said. “I’m getting ready to declare bankruptcy, and they can go whistle Dixie for their money.” MacDonald said she had hoped the association would be more willing to work with homeowners. McCray said the association has been very “tight” with its funds, and plans to remain that way. “If folks just aren’t going to pay, we have to go through the process,” McCray said. “The whole association can’t die because you can’t pay.” Brandon Darnell can be reached by e-mail at email@example.com.