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HOAs have rights when members default on payments

On Behalf of | Dec 19, 2019 | Firm News

As an HOA in Michigan, the idea that a subscriber may default on payments probably crosses your mind occasionally. Your HOA has rights when it comes to collecting subscription payments that are past due. At Pentiuk, Couvreur & Kobiljak, we understand how the state’s specific legislature protects your association from suffering a loss due to member nonpayment. 

According to Act 162 of the Nonprofit Corporation Act, the HOA is able to collect on this debt as it would any other debt owed to it. An HOA is also able to rescind the subscription and recover any damages caused by the breach of contract. Depending on the specific situation – and the amount of arrears owed – the HOA may be able to start a lawsuit, put a lien on the property, or even foreclose on the property to collect the funds from the homeowner. 

The governing documents for an HOA also help determine what course of action is admissible. The attempt to recover funds must be consistent with the articles of incorporation and the bylaws of the HOA. If the documents specifically state that the HOA cannot place a lien on the property, it must recover the funds through another means. 

Generally speaking, no one plans to default on their HOA payments. The other members of the HOA are also homeowners, so it is likely that they feel concerned about the situation as well. It may be worth chatting with the member to discover why they are behind on their payments and if they will be able to catch up. For more information, visit our webpage on housing and homeowners association law.