It may come as a shock to homeowners who don't take the time to read the fine print, but if you fail to pay your homeowners association fees, title to your property can be sold at auction to the highest bidder.
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"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," said Arlette Harada, an attorney with Ekimoto and Morris, which represents the Mililani Town Association.
Friday afternoon at the state Capitol, Harada auctioned the title to a townhouse at Mililani Manor on Kipapa Drive for $10,000 after the owner fell more than a year behind on her dues. Although the fees added up to just over $600, the cost of attorneys added thousands of dollars more. According to the auction notice posted online, the total amount owed to the MTA at the end of January was $3,439.14.
In a statement to KITV4, MTA board President Bob Barrett said the association works with homeowners who are behind on their dues, but at times a non-judicial foreclosure is the only remaining option.
"Delinquent accounts are sent into foreclosure as a last resort when all other reasonable options are exhausted," wrote Barrett. "It isn't fair to other owners if an owner doesn't pay his or her fair share."
Title to the townhouse at Mililani Manor was purchased for $10,000 after bidding began at $1. Courtney Brown did not submit the winning bid, but has been purchasing properties at auction for more than a decade.
"The associations have been more aggressive in terms of going to foreclosure than the lenders have been," said Brown. "Often, (homeowners will) lose their house to the association as opposed to the lender."
MTA considers homeowners delinquent on their association dues after 90 days, and can begin foreclosure proceedings after 6 months. The association charges each of the nearly 16,000 homeowners $102 every three months.
Investors like Brown are not responsible for the mortgage on a home sold at auction, but could lose money if the property is foreclosed on quickly by the mortgage holder. Brown earns a profit by renting such properties until the foreclosure is finalized, which can take several years.
"If the properties are going for the right amount of money, then I'm interested in purchasing them," Brown told KITV4.
Although MTA can begin foreclosure proceedings after six months, other associations within Mililani provide more time.
"By talking with the homeowners, they're more proactive in working with you and finding a solution to get caught up on their dues," said Brent Cooper, president of the Mililani Manor Association.
However, even if a homeowners association within Mililani is willing to give a property owner more time to catch up on delinquent fees, MTA has the final word on whether to seek foreclosure.
"Living here in Mililani is very unique because our town has its own association, and then you also have all the individual property associations," said Cooper. "So you've got two associations to deal with."