Unpaid association fees cost Mililani residents their homesUPDATED 9:00 PM HST Apr 11, 2014Video Transcript
Homeowners and potential buyers beware... falling behind on your association dues could cost you your house! It happens quietly, but steadily ... Every month, homeowners watch their properties sold out from under them by homeowner's associations. It happens at auction... and KITV4's Andrew Pereira attended one today. He joins us now with more- all new at six. Andrew? Kenny, a townhouse in Mililani was sold today for $10- thousand dollars after the homeowner failed to pay her dues. It's high noon at the state Capitol and the owner of a Mililani townhouse is about to lose her property. AUCTIONEER: "ANYONE INTERESED IN BIDDING? The auctioneer is attorney Arlette Harada. ARLETTE HARADA: "WE REPRESENT AN ASSOCIATION THAT IS FORCLOSING ON THEM DUE TO NON-PAYMENT OF THE ASSOCIATION ASSESSMENTS." The owner of this townhouse in Mililani Manor on Kipapa Drive owed a few hundred dollars in back association fees... Then things started to snowball... ARLETTE HARADA: "ATTORNEYS ARE BROUGHT IN... THE ASSOCIATION CAN COLLECT THE ATTORNEY'S FEES AS WELL AS THE DEBT. Q- AND THOSE CAN GET QUITE COSTLY? A- THEY CAN BE, YES." Soon... The owner had a 34-hundred dollar debt... She declined to speak on camera, but says she WAS caught off-guard. Months of angst for her... but at auction home was sold to the highest bidder in a matter of minutes .. AUCTIONEER: "$10,000 GOING TWICE... SOLD FOR $10,000 TO MR. SAMAHA." Courtney Brown did not submit the winning bid, but has been purchasing properties at auction for more than a decade. COURTNEY BROWN: "THE ASSOCIATIONS HAVE BEEN MORE AGGRESSIVE IN TERMS OF GOING TO FORECLOSURE ON IT THAN THE LENDERS HAVE BEEN. SO OFTEN THEY LOSE THEIR HOUSE TO THE ASSOCIATION AS OPPOSED TO THE LENDER." Mililani Town Association Board president Bob Barrett tells KITV4... "Delinquent accounts are sent into foreclosure as a last resort when all other reasonable options are exhausted. It isn't fair to other owners if an owner doesn't pay his or her fair share." But you may be thinking... how can a homeowners association do that? ARLETTE HARADA: "THE ASSOCIATIONS ARE GENERALLY JUNIOR TO THE MORTGAGES, SO WE SELL THEM SUBJECT TO THOSE MORTGAGES AND ANY OTHER SENIOR LIENS THAT MAY BE ON THE PROPERTY." ANDREW PEREIRA: "AND IF HOMEOWNERS LIKE THIS ONE HERE AT MILILANI MANOR DON'T TAKE THE PROPER STEPS, THEY'LL STILL BE ON THE HOOK FOR THE MORTGAGE ON THE PROPERTY THAT WAS AUCTIONED." COURTNEY BROWN: "THE MORTGAGE IS A LIEN ON THE PROPERTY. THEY'RE ON THE HOOK FOR WHAT THEY SIGNED IN TERMS OF THE NOTE." Mililani Town Association can begin foreclosure proceedings after six months. However some homeowner associations allow more time. BRENT COOPER: "BY TALKING WITH THE HOMEOWNERS THEY'RE MORE PROACTIVE IN WORKING WITH YOU AND FINDING A SOLUTION TO GET CAUGHT UP ON THEIR DUES AND WORK WITH THEM." Attorneys say a homeowner whose property is auctioned by an association can forgo paying the remaining mortgage by claiming bankruptcy. Investors who purchase homes at auction are NOT responsible for the mortgage, but could lose money if the property is foreclosed on quickly. Such investors hope to make money by renting out the property until foreclosure. Kenny?