My New HOA Sent Me a $15,000 Fine a Month After I Moved In. Here's What Happened

Not too long ago, I bought a house. I was very excited to move in and start remodeling it, since it was a fixer-upper.

Unfortunately, just a month after I moved in and shortly after I made my first mortgage payment, I got a community notice in the mail indicating I owed my HOA $15,000 in fines.

Obviously, this was pretty upsetting to me, as that's a huge amount of money. Here's how it happened, and what the end result was.

This is why I was sent a $15,000 fine

While it seems hard to believe, my homeowners association was convinced that I owed $15,000 in fines because several months earlier, the prior owners had been notified that there was some painting that needed to be done and plants that needed to be replaced. The previous owners didn't act, so fines of $100 per day, up to a maximum of $15,000, had been imposed.

When I contacted the HOA to let them know that we'd only recently purchased the property, couldn't possibly have made the repairs, and didn't even know about the requests to correct the association violations, they said it didn't matter. The fines followed the house.

And they were right. If you buy a house with outstanding fines or fees assessed by the homeowners association and those aren't paid off at closing, they can become your responsibility. They don't just disappear. The HOA can even get a lien on the home, claiming an ownership interest and potentially foreclosing on you if you don't pay up.

Here's what ended up happening

There was some good news, despite the HOA's insistence that I was responsible for the fines. When I purchased my home, I got something called an estoppel. Basically, this is a legal document you pay the homeowners association to prepare before closing. It lists all the outstanding monies due.

The estoppel did not list this $15,000 fine because it was imposed in the short period after the estoppel had been prepared by the HOA, but before we closed with our mortgage lender. Different parts of the association voted to impose the fines compared with the team that prepared the document. So the fines didn't end up listed, despite the fact that the rules for the estoppel require associations to specify any costs that will come due before closing happens.

The law in my state, and in most states, says that buyers and sellers can rely on the estoppel in good faith and the association can't collect any fines or fees not listed in it. Fortunately, I have a law degree, was able to look up these rules myself, and was able to approach the HOA with my informed knowledge, so they ended up removing the fines. If that wasn't the case, I might have had to hire a lawyer to help me -- or might have assumed I had to pay and been out a lot of money.

If you are buying a house in an HOA neighborhood, you must be aware this could happen to you. If your association has the ability to collect fines and they impose them on the former owners, you could become responsible for the costs if they aren't paid in full at closing.

You must ensure an estoppel is prepared and that you review it carefully for any signs of problems. And you must know your rights under state law if fines are imposed upon you, which you can find in your state's legislative code. Alternatively, you could just not buy a house in an HOA neighborhood -- which my story may convince you is your best bet.