When a homeowner in an association dies, do their heirs inherit unpaid HOA dues? Board members may ask themselves this question, wanting to know how to deal with the aftermath. While an HOA board might choose to forgive the debt under the circumstances, such a decision could have unsavory implications for the future. Therefore, it is important to examine the subject a little further.
Can the HOA Charge Dues on the Estate?
When a person dies, their heir does not usually inherit their debt personally. The exception to this is when the heir has co-signed a loan or has joint ownership of a business or real estate property. Another exception is if they live in a community property state, of which there are only nine. The debt, instead, transfers to the estate.
After a death, the estate goes into probate. Probate is the process of asset distribution—the distribution of assets that previously belonged to the deceased. The executor of the estate will usually use the assets to pay off the deceased’s debts. In some states, though, survivors must receive payment first.
What about outstanding debts to a homeowners association, though? Do heirs inherit unpaid HOA dues? If the deceased has unsettled HOA dues, the association will likely receive payment from the estate. The HOA can file a suit against the estate to cover the amount.
Do Heirs Inherit Unpaid HOA Dues?
Heirs do not personally inherit unpaid HOA dues or fees. However, if an heir obtains ownership of the real estate, any financial responsibilities will then be passed to them as the new owner. If the HOA had filed a lien on the property, the heir would now be liable to settle the lien or face potential foreclosure.
Additionally, the heir or new owner now shoulders the responsibility of paying future dues. Since they inherited the property, they also became members of the association. Membership typically comes with the obligation to pay association dues. They can’t refuse to pay dues, or else they will face consequences. The only way to get out of it is to sell the home.
Proper Protocol to Follow
When a resident dies, homeowners’ associations should follow the proper protocol. Here are the key points to consider regarding inherited property and HOA dues.
Offer Condolences
The HOA board should not immediately attempt to collect unpaid dues after a resident’s death. It is essential to exercise tact and offer respect. The deceased owner’s heirs are likely having a hard time coping, so condolences are in order.
Schedule a Meeting
The HOA board should wait 10 to 14 days before scheduling a meeting with the executor or the family. This gives them space to adjust and cope with the loss. However, it is best not to wait longer than one month. Allowing too much time to pass might make it difficult for the family to cooperate with the HOA.
Board members should approach the subject with grace and tact. The heir might not know about the unpaid dues or that there are any HOA dues to begin with. Talking about the topic at the meeting will help everyone get aligned. It is also an opportunity for the heir to ask questions about the HOA.
Adhere to Normal Collection Procedure
The HOA should follow the normal collection process when collecting unpaid dues after a death. Of course, it is best to first contact the executor or the heir to see if they can settle the unpaid dues. However, the HOA might not be able to reach them.
In that case, the HOA board can file a lawsuit or place a lien on the home. This will allow the association to collect the outstanding debt. The HOA can also initiate foreclosure proceedings.
Remember that the HOA should attempt to do this after at least a month or two following the death. The association should be respectful and do whatever it can to contact the deceased owner’s heirs.
Dues Moving Forward
The estate executor can’t use the assets to pay any HOA dues due after the death. The heir or new owner of the property will assume responsibility for future fees. This happens even if the new owner opts not to reside in the home or unit.
Of course, the new owner can choose to rent out the home or unit to a tenant, subject to the HOA’s rental policy. The new owner can then use some of the rental income to pay the monthly dues.
Most associations try not to place a lien on the home if possible. Board members must understand that the deceased owner’s family probably did not expect to shoulder the responsibility of HOA dues. They did not sign up for this, after all. As such, the HOA board might consider giving them more time than normal to keep up with payments.
Even if the HOA already explained the financial obligations and fee schedule at a prior meeting, it is best to reiterate the information to the new owner. Give them all the information they will need and provide them with a copy of the governing documents. This will help ensure a smooth transition and prepare them for what’s ahead.
Do Heirs Inherit Unpaid HOA Dues? Answered!
In general, heirs do not personally inherit unpaid HOA dues of deceased owners. However, they often inherit the property, which may have a lien attached and always comes with the obligation to pay future dues. Board members should practice common decency and give the grieving family time to adjust before collecting the outstanding balance. However, the HOA is within its legal right to place a lien and initiate foreclosure proceedings if the new owner refuses to pay.
Cedar Management Group offers expert HOA management services to homeowners associations and condos, including help with collections. Call us today at (877) 252-3327 or email us at help@mycmg.com to get started!
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