Scott Brady is co-owner and principal of Progressive Association Management, a CACM-member HOA management company serving 228 communities and nearly 15,000 homeowners throughout Southern California. Since founding the association management division in 2020, Scott has grown the company into the fastest organically growing association management firm in California by limiting manager workloads, providing full back-office support, and holding every team member accountable to documented daily service standards. |
When you buy a property in a homeowner association, opting out of paying monthly assessments is not an option. Failing to pay your dues can lead to substantial fees and, in serious cases, the loss of your home.
Think of it this way: if your community has 50 owners, you are responsible for 1/50th of the shared liabilities. Your monthly assessments are generally split between two areas:
- Operating Expenses: The routine, everyday costs of running the community, including landscaping for common areas, trash removal, security, amenities like pools and clubhouses, community-wide insurance, and administrative management costs.
- Reserve Funds: A portion of your dues set aside for long-term capital improvements and major repairs, such as repaving roads, replacing a clubhouse roof, or repairing elevators. Properly funded reserves protect owners from unexpected special assessments when something major breaks.
Paying your HOA assessment is a legally binding obligation outlined in your community’s governing documents. These funds keep the community running day to day and build a financial cushion that prevents deferred maintenance and protects overall property values.
What Happens If You Stop Paying?
In California, failing to pay your assessments can result in late fees, suspension of access to community amenities, a lien on your property, or foreclosure proceedings. Here is the typical progression, from the first missed payment to the most serious consequences.
Late Fee
Most governing documents specify a late fee, typically ranging from 5% to 10% of the monthly dues. On a $400 monthly assessment, that’s $40 for every month you’re in arrears. Dues are generally considered late if not received by the 15th of the month. Most management companies offer online payment options so owners can set up automatic monthly deductions and avoid this entirely.
Pre-Lien Notice
If a balance remains delinquent after 30 days, the management company can send a Notice to Lien, also called a pre-lien letter, without requiring a board vote. This is issued when an owner is effectively 45 or more days late and serves as a formal warning that the board has the legal right to place a lien on the property.
This is an expensive letter to receive. Most management companies charge the owner $150 to $300 to prepare and mail it. Using the same example above, if you’re 70 days late with a 10% late fee on $400 monthly dues and a $250 pre-lien fee, you now owe $1,130. Because association accounting uses modified accrual, the management company charges this fee to the association with the expectation that it will be recouped once the owner becomes current.
Lien
If the pre-lien warning is ignored, the board can vote to place a lien on the property to protect the association’s legal rights. That lien is recorded on the title and must be resolved before the owner can close escrow if they choose to sell. It is also a public record, meaning anyone who searches the property can see that dues are unpaid.
If the owner already has a mortgage, the association lien is secondary to that loan, and property taxes take priority over both. The lien must be prepared and recorded at the county recorder’s office, and the cost typically runs $300 to $500.
Collections and Foreclosure
If the delinquency continues and the total unpaid dues exceed $1,800 (not including fines, late fees, or lien costs), the board can vote to send the account to collections. This involves a third-party collection agency or law firm that specializes in HOA debt recovery.
The collection agency will typically attempt to work with the homeowner to resolve the debt before pursuing foreclosure. If the board authorizes foreclosure, the HOA can record a Notice of Default to officially begin the process. The homeowner then has a 90-day window to resolve the debt. If it remains unpaid, the HOA can issue a Notice of Trustee’s Sale.
HOA foreclosures in California are typically nonjudicial, meaning they take place outside the court system but are subject to strict legal requirements and can take many months, if not longer, to conclude. The cost to complete a foreclosure can range from $20,000 to $50,000, and there must be sufficient home equity to make the process worthwhile. Even reaching the collections stage carries an initial cost to the board of $1,000 to $5,000, plus ongoing legal fees.
Why Every Owner’s Payment Matters
The HOA relies on every member paying assessments in full and on time. If even one owner doesn’t pay, the budget falls short. If multiple owners stop paying, the association may be forced to levy special assessments on everyone else to make up the difference, which is an unfair burden on owners who have met their obligations.
If you have questions about your financial obligations as an HOA owner, Progressive AM is happy to help.
