Another Kind of Guest Blog

(note to readers: This lady’s email request was so poignant that, with her permission, I wrote it up as a ‘guest blog’. Let’s help her with some suggestions)  


guest blog by Pippi

Hello! As many homeowners have likely done, we bought a place with an HOA. It was in 2005, and it was our first home. I would need 2 hands to count all the mistakes we made, and have nobody to blame but ourselves.

Our real-estate agent was also an owner here, and on the board, and quite pushy. Fast-forward 9 years – our condo that we bought for 96,900 is now worth about 40k! We pay “interest-only” on the loan (almost no equity at this point). We pay 417/mo. for HOA and utilities (no washer or dryer, no air conditioner, no tv in living room, etc).

The whole property is a dump. They are trying to pass a special assessment. Our portion of it would be almost 7k. They are “offering” a payment plan of 2 years, so about $280/mo on top of the $417. If I had $700/month extra, I wouldn’t be living here. In return for this assesment, we get nothing (and in fact, it includes the demolition, but not rebuilding, of our carport for insurance reasons).

Part of the reason we bought this home was that the dues included an exercise room, hot tub and car port, and now all 3 of those amenities will be absent.

I’m looking for advice on how to get out of this mess. We can’t sell, as we’re upside down, and one would have to be crazy to enter into any agreement with this HOA. We can’t even short-sell, as an older management company put liens the on every unit for non-payment of emergent repairs. Ugh, help! Do we just quit paying and save the dough to rent? Pay the bank but not HOA? Pay both and hang in there as long as possible?

This is the tip of the iceberg as far as our HOA issues go. I could write a book, too, unfortunately.


8 thoughts on “Another Kind of Guest Blog

  1. Nila Ridings

    Pippi, honey you’re on the Titanic. The lifeboats are gone.

    We’ve had people in my HOA in the same predicament. They walked away. Yes, it dings your credit rating but you’re throwing good money after bad here. You will never come out in good shape on this property. I say it’s time to cut your losses.

    The HOA may very well be breaching their contract with you but even if they are I say it’s not worth fighting them with litigation. Regardless, if they are or not, you’re still going to end up in icy cold waters. Depending on what state you are in there may be some consumer protection laws that would cover you.

    I am not an attorney. For you to learn the legal ramifications for any action you take you will need to speak with one. I will give you some guidance on what documents you need to get together before you contact an attorney, if you’d like. Send Ward your phone number at his email address and he will forward it to me.

    There are plenty of experts that read this website. I hope we’ll see more opinions posted.

    1. Ward Lucas Post author

      Nila, just brainstorming here for Pippi. Would she do better to try to find a buyer who would pay the 30 or 40,000 it would take to sell and get out. It won’t help her credit, of course, but it could at least show that she had every intention of cutting the losses of her creditors. It elevates her to a status much higher than a complete walkaway. Your thoughts? -Ward

  2. Nila Ridings


    She said she paid $96,900 and pays interest only on the loan with very little equity. If she sells for $40K she has to pay the lender $56K to walk because the loan has to be satisfied to close the sale. If she has that kind of cash on hand she’d be better off to invest it in another property. If she doesn’t she would have to find that kind of money somewhere…grandma, rich aunt, somebody…and she has nothing to show for it. She’d be throwing her $56K down the drain. If a relative is willing to loan her the money for a mortgage she would be better to use the money on another property and let the relative carry the mortgage for her and pay them her monthly payments + interest.

    On this property any/all money she pays is a total loss. She can’t spend her way out of this rotten piece of real estate. She’s paying interest only so she’s spinning her wheels in mud already.

    I’m one that believes the more lenders that get stuck with these properties the faster we will see changes in the world of HOAs and COAs. As we know, money talks. When the lenders start screaming that they are getting burned on a bunch of junk condos and HOAs, the feds will listen. If she sells it, we already know another innocent person gets burned. And the cycle starts over again. Just like it’s been cycling for fifty years. Dumping junk real estate on our fellow Americans is only harming more of us and making the HOAs and COAs stronger and wealthier. We need to break the cycle. Breaking the mortgage lender breaks the bank which breaks the cycle.

    Sorry for the rant but if I were in her shoes…I would stop the insanity. I would find a place to rent. Move. Call the mortgage company and say, I left the keys on the counter. Or before I moved I would call the mortgage company and ask if they would accept the deed in lieu of foreclosure. It would be a miracle if they would because they have already turned down the short sale but it never hurts to ask.

    In addition…let’s assume she borrowed $90K @ 4.0% for 30 yrs. That makes her payment for principle and interest only $430 per month. She’s been paying interest only so nothing has been amortized on the loan…it’s all been interest on the entire principle. That would mean she has paid over $45K on a loan of $90K and never gained a dime towards paying it off. Even if the lender recovers $25K on the loan their hit isn’t all that bad. If they recover $50K they break even.

    Her greatest risks is in what the HOA is going to hit her for if the lender takes years to foreclose. As I understand it until they complete the foreclosure she is liable for the dues and assessments.

    The very first thing she should do is contact an attorney that handles contract litigation. If she takes him/her all the right documents she may have to pay for a couple of hours of billable time and that would be well worth it. She could be pulling those documents together while she’s packing to move.

    I would also make every effort to expose this real estate agent that knew exactly what she was doing to this buyer and young couple. I suppose there is no law against a realtor/board member selling property in her own HOA but this one took advantage of this buyer, in my opinion. I wouldn’t fail to mention the events of the transaction to the attorney, either. There is a always the possibility there was information that the agent failed to disclose. If so, the attorney would gladly strap the agent to one of the deck chairs and let him/her go down with the Titanic!

    1. pippi

      I just wanted you to know that I’m checking in and appreciate the feedback so far. I agree with the “consulting a lawyer” part. Unfortunately, it seems like a catch 22. I can’t afford to do that unless I withhold payment form either the HOA or the bank (mortgage), and I don’t care to get any deeper into late fees or interest (HOA charges both). I’ll gather our specific numbers now and post them. We do have a small amount of equity.

  3. pippi

    Our loan was never ideal. We had bad credit coming into this. We weren’t even looking to buy, we were looking to rent. She showed us this place and then told us, “Oops! It’s only for sale. Worse they can do is say no…may as well apply!”. So that was our first mistake. We were in love with the property at the time and knew deep down that we should read the CCR, but even if we had time to read a hundred-odd-page document, we wouldn’t have understood it. We spoke to one neighbor and he had no complaints, so we dove in. I’d also like to point out that at this time, we are two payments behind on the HOA, and one (the current payment) late on both mortgages. We had a family emergency (my kids’ custodial parent passed away last month) that set us back due to missed pay, and will likely continue to be an ongoing problem, as we just acquired two teenagers that I was only partially supporting prior to this. Numbers time:
    Mtg A: Balance of 17,500
    Fixed (awful) interest rate of 11.45% (this used to be variable
    Our monthly payment on this is 191, with only about 25 (dollars, not percent) going to principal

    Mtg B Balance of 68,240
    Fixed interest of 5.75
    Monthly payment of 456, with roughly $100 going to principal

    HOA payment presently $417/ month (including utilites – but as mentioned before, we have no laundry, or A/C, and our furnace rarely works – can’t afford a new one)

    If special assessment gets passed, then payments will be about $700/month.

    We presently owe the HOA about a grand, just from missing May and now June, with interest compounding.

    Feel free to chastise me for falling for this ridiculous deal. I went to 15 schools, and the thought of a place of my own was something I never imagined, and I became delirious. Getting out is the obvious answer, I just need to know the least damaging way to do it. Also, an older HOA mgmt company did emergency repairs (water heaters, etc) without approval from the board. Board refused to pay them, as it wasn’t authorized. That company now has a lien on every unit. Sorry for the wall of text, and thanks for making it to the end. I’ll forward my number to Ward. Thanks again.

  4. Dave Russell

    Pippi, Please contact me I may have some good information for you. I would also like to review your associations governing documents. There may be a thing or two that I can help you with.

  5. ML Durham

    I don’t know what state you are living in –which makes a difference.
    I concur with getting legal advice; the problem is finding an attorney with experience in condo association law… important that you do.
    Also agree you need to run, not walk, away as quickly as possible. The scenario is not going to get better but it certainly can get worse
    With the value of the property upside down coupled with a special assessment — I doubt your lender will foreclose; they do not want to pay assessments. Until the lender forecloses you will be responsible for the assessment, late charges, interest, and legal fees attributed to your unit.
    I would ask attorney about giving the association your unit in lieu of foreclosure.

  6. Nila Ridings

    Pippi’s situation is tragic to say the least. It has been a great learning experience for all of us. After private conversations, we all agree there is no option but to get out and it looks like that will happen through bankruptcy.

    Real estate agents that show a potential renter a property and suddenly it’s “only for sale” are not ethical. This agent knew long before she showed this unit to Pippi that it was not for rent and she was going to pull a fast one to get it sold. She needs to be reported to the Board of Realtors.

    It saddens me to think all this time Pippi has been making payments which could have been for rent and saving towards building good credit and becoming debt-free. Now, she faces bankruptcy and years of living “cash only” because she met with a con for a real estate agent.

    I think for starting a post-condo life Pippi would find reading and listening to Dave Ramsey to be very beneficial.

    I hope at least one person will read Pippi’s story and be saved from the same devastation.


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