Covenants

• If you buy a home within an HOAs jurisdiction in Florida, you must sign an HOA membership contract or covenant when you take possession of the home. The HOA agreement includes rules by which members must abide. HOAs assess fees that cover the cost of insuring and maintaining community property as well as other miscellaneous costs. Under Florida law, each HOA member must pay an equal share of the HOA's costs, although construction firms that own newly built units are sometimes exempt from paying HOA fees.
  
  

Penalties

• HOAs can assess penalty fees if members violate rules, and those fees cannot exceed $100 per rule violation or a cumulative $1,000 for repeat offenders. HOA members must pay association dues on a monthly, quarterly or annual basis, and most HOAs charge penalty fees when you fall behind on these payments. If you fail to pay the debt, the HOA can take you to court and begin foreclosure proceedings, although foreclosures in Florida do not typically occur until six months after you fall behind on payments.
  
  

Foreclosure

• You can defend yourself in court, but Florida foreclosure cases are decided by a judge rather than a jury. If the judge rules in the HOA's favor, the HOA takes legal possession of your home. Other liens, such as your mortgage, remain in place, although your lender can begin foreclosure proceedings once you lose the home. HOAs may rent out foreclosed homes while the mortgage lender begins foreclosure proceedings aimed at collecting the unpaid mortgage debt. If you have no mortgage, the HOA may retain ownership of the home or sell it. HOAs use rental income to cover your unpaid dues.
  
  

Lenders

• When the lender's foreclosure case reaches fruition, the lender sells the home to raise funds to cover the mortgage debt. In some instances, HOAs end up with little or no cash as attorney fees eat up the rental income. In other instances, the lender forecloses shortly after the HOA, and the foreclosure auction fails to raise enough cash to settle the mortgage and the HOA lien, meaning the HOA ends up empty-handed. Consequently, some HOAs prefer to work with homeowners rather than rush to foreclose.
  
  

Considerations

• While Florida's laws might seem strict, in many other states, HOA agreements include a power of sale clause. This clause allows the HOA to conduct a non-judicial foreclosure in the event you default on your association fees. Rather than the case going before a judge, the HOA records the sale clause at the county courthouse and may the sell the home. Non-judicial foreclosures often occur within 90 days of homeowners falling behind on HOA payments.