What Happens If HOAs Can Affect Your Credit Score?
guest blog by Nila Ridings
At various times, I have heard the discussion of HOAs having the ability to report delinquencies in HOA dues to credit reporting agencies. The link below offers some excellent information about the importance of having excellent credit. It also brings to mind the additional risks of owning in an HOA.
For example: Numerous times in my growing up years, my dad told me to never co-sign a loan for somebody. He would not be proud to know I listened to him and never co-signed for a friend’s loan, but I did co-sign to pay the debts of 512 of my neighbors! That’s right. Buying in an HOA puts every homeowner in a position of being the guarantor on all debts, loans, lawsuits, settlements, construction defects, and disaster rebuilds. That makes co-signing for a car loan for your recent college-graduated kid brother seem like small potatoes, doesn’t it?
According to this article, a bad credit score can prevent you from getting a license to practice medicine, law, and other professions. Hypothetically, let’s say grandma gives you the gift of a down payment on a condo so you have a place to live while you go to medical school in Boston. And you leave your trash can out twelve hours too long because an emergency happens and you stay to help at the hospital. So, the HOA fines you $100 for the trash can violation. You refuse to pay it. They tack on another $2,000 for the attorney to send you a letter demanding the money for the fine. Next comes interest, more legal fees, and on and on. If this HOA had the power to report to the credit reporting agencies you could graduate from medical school, pass your boards, but still not be issued the license to practice medicine! All because of one day when you were trying to help save lives you didn’t make it home to put the trash can away by the deadline.
If I shared this scenario with a non-HOA resident they would most likely laugh and say that is insane!!! But for those of us who live in HOAs we know all too well this could very likely happen.
I think it makes yet another good point why HOAs should never have the ability to affect the homeowner’s credit. Not to mention so many of these HOAs have such poor financial record keeping.
For example, I talked to a neighbor a few days ago. He told me our HOA has gotten a judgement for back dues against him. He asked for a ledger so he could see what charges they have applied. They told him they do not have one, but would try to get it from the property manager. The property manager said they do not have one, but maybe the previous property manager has one. The only thing anybody seems to have is a total amount he owes. In the past, he has owned a business and finds this insane that nobody can give him a detailed ledger of the charges. I agree with him, it is insane. And he is at the mercy of them to pay what they demand because his house is being held hostage with a lien. What would happen if they could also destroy his credit rating?
Clearly, too much power would be in the hands of the totally incompetent. There’s no limit to the destruction they could cause to homeowners in HOAs!
America, please wake up! Please stop pretending that HOAs are some sort of fun-loving living paradise! Please stop building these horrible nightmares! And please prevent them from EVER having the authority to report to the credit bureaus!
(link to column about credit scores and how they can impact you)
