Thought experiment... poor elderly person living massively beyond their real estate means

Archived From: Finance
  • Page :
  • 1
  • Text Only
Voting History
rated:
This may be stupid and I dont have the energy to coherently express my thoughts here... buttttttttt...

What is to keep granny from spending 100% of her non-judgement-proof assets to buy one of those condos with crazy $2000 a month fees for an artificially low price (because the condo fees/HOA/whatever is baked into the market price).  The ones people basically give away because the assessments are outrageous.

Social security and primary residence are both judgment-proof in most states right?  Granny pays halfprice or so of effective actual cost of condo/house/whatever and then never pays a dime for HOA/condo fees.  Will they go after it in probate when granny croaks or is there a way to protect and pass the house without a lien on it?

Member Summary
Most Recent Posts
^This.

Before BK, as utilization ratio increase, credit cards will lower her credit limits even before going into default... (more)

Shandril (Sep. 27, 2016 @ 9:45a) |

She could use the credit cards to buy physical gold which she buries in an undisclosed location, while simultaneously ma... (more)

jagec (Sep. 27, 2016 @ 12:03p) |

Uh, no.  I am sorry/not sorry, but HOAs are ridiculous.  There is no real "community interest" unless you have attached ... (more)

Dus10 (Sep. 27, 2016 @ 12:09p) |

Staff Summary
  • Also categorized in:
Thanks for visiting FatWallet.com. Join for free to remove this ad.

why wait? do it now!

They can usually foreclose over unpaid HOA/condo fees.

jd2010 said:   ...one of those condos with crazy $2000 a month fees for an artificially low price (because the condo fees/HOA/whatever is baked into the market price).  The ones people basically give away because the assessments are outrageous.
...

  

Where are those condos?

$2k HA seems over the top high outside of fancy places in NYC.

 

Plot twist: granny maxes her credit cards/loan shark money/whatever to keep the HOA current and then defaults on the credit cards, does anyone have any recourse now?
(PS - Policy question, why are we giving HOAs the power that no other creditor in the world outside of a mortgage underwriter has to take a judgment-proof property?)

jd2010 said:   (PS - Policy question, why are we giving HOAs the power that no other creditor in the world outside of a mortgage underwriter has to take a judgment-proof property?)
That is a protection for homeowners. Let's say the roof on a condo leaks. If no one pays their dues because there is no "teeth", what would happen? Either a few of the people would pay for the repairs or the entire property and its individual units become worthless as the building falls apart.  

It might work in Florida. I don't think your residence has that much protection in other states. And I imagine every potential creditor in Florida has already thought if it. Interesting idea.

http://www.nolo.com/legal-encyclopedia/state-hoa-foreclosure-law...

They have links to a topic for each state and I do not see a single state that doesn't allow HOAs to foreclose.

Its not definitive but it doesn't appear any state protects houses from HOA foreclosure in general.

Yes, an HOA board can foreclose on your house just like a bank can.  There is a contract that runs with the land, it basically gives the HOA rights to your house if your fail to pay your dues or otherwise violate the community covenants.  I've been on my HOA board for several years and we've had to move into foreclosure on a few homes due to lack of dues payment.  It isn't anything ANY board wants to do, but the board has a responsibility to the community above individual home owners.  Back in the worst days of the recession, we had cases where we had to cancel repair projects because too many home owners where delinquent on their dues.

In the case of the OP, a home owner who moved into my community and then promptly didn't pay their dues would find themselves foreclosed on by our HOA within 6 months.  I suspect most HOA's have similar guidelines for dealing with delinquent dues.

You move into an HOA with the understanding of a contract between the owner and the HOA, the HOA will promptly respond to issues it's responsible for and the owner will pay their dues so the HOA can.  Like any contract you enter into, you give up something in exchange for something you think is better.  In my community of town homes, the owners give up their monthly dues in exchange for not having to do lawn maintenance, paint the building, take care of the siding or roofs along with intrinsic things like having the HOA ensure a home owner doesn't tear down his car in the driveway and leave it in pieces on blocks for days, weeeks or months.
 

jd2010 said:   Plot twist: granny maxes her credit cards/loan shark money/whatever to keep the HOA current and then defaults on the credit cards, does anyone have any recourse now?
(PS - Policy question, why are we giving HOAs the power that no other creditor in the world outside of a mortgage underwriter has to take a judgment-proof property?)


Recourse? Probably not, but how long do you think granny can keep that scheme working until the credit runs dry?

There are easier and more effective ways to cheat the system than what OP is suggesting.

tuphat said:   There are easier and more effective ways to cheat the system than what OP is suggesting.
Like what? 

op: What class is this homework for?

Mickie3 said:   op: What class is this homework for?

The one where I'm trying to keep my mother's head above water til she croaks.

Was just curious... Haven't taken the plunge on buying something in an hoa so what's obvious to most of you wasn't to me. Seemed like a sweet scam if hoa didn't have recourse.

jd2010 said:   
Mickie3 said:   op: What class is this homework for?

The one where I'm trying to keep my mother's head above water til she croaks.

Was just curious... Haven't taken the plunge on buying something in an hoa so what's obvious to most of you wasn't to me. Seemed like a sweet scam if hoa didn't have recourse.

It's a game of timing.  How long do you expect her to live?  How many months/years can she or you afford to pay the HOA fees to establish some credibility and good will with the community before defaulting?  How comfortable are you with exploiting that good will as part of your con?  Is she going to be able to play along like a good grifter or will she blow it?  Once that good will runs out, how long would it take for them to finally evict her?

AverageGuy09 said:   Yes, an HOA board can foreclose on your house just like a bank can.  There is a contract that runs with the land, it basically gives the HOA rights to your house if your fail to pay your dues or otherwise violate the community covenants.  I've been on my HOA board for several years and we've had to move into foreclosure on a few homes due to lack of dues payment.  It isn't anything ANY board wants to do, but the board has a responsibility to the community above individual home owners.  Back in the worst days of the recession, we had cases where we had to cancel repair projects because too many home owners where delinquent on their dues.
  You mean, you had to stop using HOA funds to funnel money via overpriced contracts to your brothers construction company who would do sub-par work at extreme prices, which would need redone a short time later so you hired your cousins company this time? 

I am in an interesting situation where I am in a HOA community without being in the HOA, due to my house being the last one on the street which crosses county lines and would have required way too much effort to include my home.  I hear them complaining all the time about the overpriced fees that go toward basically nothing (basic landscaping on the streets is about it).  At least one neighbor found out I wasn't in the HOA when they called to complain about some of my "violations"... man were they pissed to find out I didn't pay anything and didn't have to follow their rules.
 

If she can afford half the price of a house then buying a house with a reverse mortgage might work. Look at a Home Equity Conversion Mortgage for Purchase, or HECM. Reverse mortgage would be a goof fit if the goal is just to keep her afloat financially.

jd2010 said:   
Mickie3 said:   op: What class is this homework for?

The one where I'm trying to keep my mother's head above water til she croaks.

Was just curious... Haven't taken the plunge on buying something in an hoa so what's obvious to most of you wasn't to me. Seemed like a sweet scam if hoa didn't have recourse.

  I know this is a novel idea, but bear with me here, has it occurred to you to step up and help your mom with expenses "until she croaks" instead of trying to find a way to defraud the rest of us?

jd2010 said:   Plot twist: granny maxes her credit cards/loan shark money/whatever to keep the HOA current and then defaults on the credit cards, does anyone have any recourse now?
(PS - Policy question, why are we giving HOAs the power that no other creditor in the world outside of a mortgage underwriter has to take a judgment-proof property?)

  Plot double twist.  After granny declares BK, she STILL can't pay the HOA and they foreclose.

forbin4040 said:   
jd2010 said:   Plot twist: granny maxes her credit cards/loan shark money/whatever to keep the HOA current and then defaults on the credit cards, does anyone have any recourse now?
(PS - Policy question, why are we giving HOAs the power that no other creditor in the world outside of a mortgage underwriter has to take a judgment-proof property?)

  Plot double twist.  After granny declares BK, she STILL can't pay the HOA and they foreclose.

  ^This.

Before BK, as utilization ratio increase, credit cards will lower her credit limits even before going into default (but also quickening how fast she defaults on HOA fees). In which case, granny can no longer make HOA payments way before BK. Depending on timing foreclesure may occur prior to BK. Upon foreclosure, any equity in the condo/house should be usable to pay HOA overdue fees and credit card balances.

Net result in this case would be granny having blown a lot of her pre-pruchase assets on outrageous HOA fees and credit card interest. Plus for finding a new (much more modest) place, she now has shot her credit score so will pay through the nose in interest rate on subprime lending market. So, she may come back to live in with her kids. Lose-lose. She's not only blown your inheritance but she also wormed her way into living at your place.

vipercon said:     You mean, you had to stop using HOA funds to funnel money via overpriced contracts to your brothers construction company who would do sub-par work at extreme prices, which would need redone a short time later so you hired your cousins company this time? 

I am in an interesting situation where I am in a HOA community without being in the HOA, due to my house being the last one on the street which crosses county lines and would have required way too much effort to include my home.  I hear them complaining all the time about the overpriced fees that go toward basically nothing (basic landscaping on the streets is about it).  At least one neighbor found out I wasn't in the HOA when they called to complain about some of my "violations"... man were they pissed to find out I didn't pay anything and didn't have to follow their rules.

  You know, I have always known that I don't want to live in a HOA community because I can't stand that kind of interference, but living in one without having to obey the rules might almost be worth it.
forbin4040 said:   
jd2010 said:   Plot twist: granny maxes her credit cards/loan shark money/whatever to keep the HOA current and then defaults on the credit cards, does anyone have any recourse now?
(PS - Policy question, why are we giving HOAs the power that no other creditor in the world outside of a mortgage underwriter has to take a judgment-proof property?)

  Plot double twist.  After granny declares BK, she STILL can't pay the HOA and they foreclose.

  
She could use the credit cards to buy physical gold which she buries in an undisclosed location, while simultaneously making frequent trips to Vegas to build up the facade of a serious gambling problem so that the creditors won't go looking for assets.  Once the BK goes through, dig up the gold and use that to pay bills/HOA assessments/H&B.

Hmm, that sounds kind of familiar...

AverageGuy09 said:   I've been on my HOA board for several years and we've had to move into foreclosure on a few homes due to lack of dues payment.  It isn't anything ANY board wants to do, but the board has a responsibility to the community above individual home owners.  Back in the worst days of the recession, we had cases where we had to cancel repair projects because too many home owners where delinquent on their dues.
  Uh, no.  I am sorry/not sorry, but HOAs are ridiculous.  There is no real "community interest" unless you have attached homes beyond what is addressable outside of what the municipality/county could handle.  There is easy recourse... stop services.  Most folks don't use/want them outside of these "no maintenance" communities.  With respect to that, states need to differentiate between fees for amenities and and real maintenance requirements.  If it is amenities, remove access/privilege.  If you have to few people paying that portion, get rid of the amenities.  My neighborhood has no amenities, that is why I chose this neighborhood, but other homeowners are wanting amenities, now (just handed over HOA from developer)... the city has a great park within walking distance that has an annual membership available for the water park and fitness center... have fun and stay out of my pockets.

Unless it is maintenance for attached homes... nothing the HOA does is truly essential.



Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.

Thanks for visiting FatWallet.com. Join for free to remove this ad.

While FatWallet makes every effort to post correct information, offers are subject to change without notice.
Some exclusions may apply based upon merchant policies.
© 1999-2017