Hoarders & Homeowner’s Associations
One popular reality show today is A&E's "Hoarders. "The show details the problems of pathological hoarding or disposophobia. The individuals acquire possessions and fail to discard them even when the items are worthless, hazardous, or unsanitary and impair mobility and interfere with basic functions of life. The show scratches a morbid curiosity and probably makes "normal" people feel good about that stack of old TV Guides they haven't thrown out yet. It also illustrates a serious physiological condition.
A Homeowner's Association client of mine was faced with this issue. After receiving numerous complaints from neighbors regarding pests and odors from one townhouse unit, the manager investigated and found an out of control hoarding situation. Garbage and trash were piled up past window height. Poisonous spiders, insects, rats and feral cats roamed the unit. The owner refused to clean his unit and refused to allow the manager to clean it. Witnessing severe unsanitary conditions, the manager asked for help from the county's social services, the fire department, the police department and even animal control. They were unable to help him as the owner continued to refuse to allow anyone to enter and refused any psychological help. The manager then called me.
The hoarder was the owner (not a tenant) and had paid his assessments on time so initially there was no basis to force him to leave. I had to look deeper. Most sets of HOA restrictive covenants (also known as "declarations") contain language that requires a unit owner to keep their unit in good condition and repair, and prevents a unit owner from causing a nuisance to any other owner. If the unit owner fails in this duty, the HOA has the power to enter the property, fix the condition, and then assess the homeowner for the expenses. This was the procedure we had to follow.
First, we had to give written notice to the homeowner to correct the situation. By this time, the post office had refused to deliver mail to the unit, because the owner never cleaned out the mailbox, so I had to hand-deliver a notice. We gave the owner a number of days to correct the condition or the HOA would. The notice period was set forth in the restrictive covenants. When the time passed and the homeowner had taken no steps to correct the condition, we moved to the next step.
Although the covenants provided that the HOA had the right to enter the property without further notice or court action, because the homeowner refused entry, the police would not assist without a court order. Rather than have the HOA force their way in and defend a trespass suit, the better way was to go through the court. We therefore filed a court action and asked the judge for a preliminary injunction to allow the HOA entry to the unit for cleaning and for the police to provide assistance. The police wanted very specific instructions from the judge on the use of force and the time period of the cleaning. After notice to the homeowner, a hearing was held before the judge. I laid out the authority in the covenants and provided affidavits and photographs of the condition in the unit. The judge granted our motion (although I think the photographs ruined his lunch), and then I worked with the attorney for the police department in getting the specific detail they needed in the order to assist me.
After the judge signed our order, the HOA retained a cleaning company who went to the unit along with three police officers in HAZMAT suits, an animal control officer, and a social worker. Thankfully, after discussions with the police, the homeowner allowed the cleaning crew into the unit without the use of force. Unfortunately, he still refused any psychological or other assistance and the social worker said she could not help. The cleaning crew spent two days and filled up two dumpsters with trash and garbage. A pest control company treated for rats, spiders, ticks and other pests. By the end, the unit was clean and the HOA had racked up a substantial cleaning bill. The cleaning crew remarked that it would have been more sanitary for the homeowner to live in the dumpster as that would at least be emptied every month.
Next, again following the procedure in the restrictive covenants, the HOA (again with the mandated written notice) levied a special assessment on the homeowner for the costs of cleaning, court and attorney fees. The homeowner refused to pay. Therefore, at this time, the HOA had grounds for a lien against the property for the assessment. The lien was filed and foreclosure proceedings began. At this point, the procedure was the same if the hoarder had simply failed to pay his annual dues, a much more common problem with Homeowner's Associations.
Foreclosures for HOA liens follow the same format as a more typical bank foreclosure. The clerk of court sits for the initial foreclosure hearing. Essentially, she makes sure that the documents are correct and verifies the amount owed. If the foreclosure is contested, a judge may hold a hearing and delay or deny the foreclosure. In this case, the documents were in order and the clerk entered the foreclosure order.
It was now up to my office to conduct a sale of the property to recover the lien amount (again growing with interest and attorney fees). After notice in the newspaper of the sale date, in an archaic procedure, an attorney in our office read aloud from the top of the courthouse steps that the property was up for sale and was open for bids. No bids for the property were received, so how would the HOA receive compensation for the lien?
The solution was to have the HOA bid on the property precisely the amount they were owed plus the attorney fees for the sale. After a bid, anyone (including the homeowner) can submit an upset bid of at least 10% greater than the prior bid. That process continues until the time for upset bids have passed. In this case, no upset bids were submitted. The HOA, because it had bid the exact amount they were due, took ownership without having to pay any additional money. After the clerk entered the final report of the foreclosure sale, the last step was the preparation of a foreclosure deed that was filed with the register of deeds
One wrinkle with the HOA's ownership was that they were actually the 2nd lie
nholder on the property. Like most homeowners, the hoarder had a mortgage. Had he failed to pay that mortgage and the bank foreclosed, the HOA's lien would have been extinguished and the HOA could only have recovered if the foreclosure sale was more than what was owed the bank. Because the HOA, who was 2nd in line, or subordinate, was the entity foreclosing on the property, they took the property (as would any third party who had bid) subject to the first loan. The hoarder, even though he no longer owned the property, still owed the debt on the mortgage, but if he stopped paying on his loan, the bank could enforce their lien against the property through their own foreclosure action even though the property was now owned by the HOA.
Regardless, because the HOA now owns the property, they can now clean the unit, sell the unit, and recover in cash their expenses after the bank loan is satisfied. They could also begin proceedings for a summary ejectment of the hoarder. Thankfully, by the time of the sale, the estranged family of the homeowner and social services got involved and found the homeowner a assisted living home where he could live in safe and sanitary conditions.
While this was an unusual experience, the same procedures would be followed where a unit owner fails to pay more ordinary annual assessments or special assessments. However, in the vast majority of the cases, the owners eventually pay the amounts due. Nevertheless, an HOA Board must be aware of the full procedure before making a decision to start down that path. In this case, it took almost a year and half from the time of the first notice that the homeowner must clean, to the HOA taking final possession, with at least a dozen various notices and copies of filings hand-delivered to the homeowner. While the HOA was frequently frustrated at the length of time of the process, all the steps had to be taken to protect the homeowner's rights in his property. Keep in mind that while the homeowner refused to cooperate or pay, he also did not contest any of the authority or facts that I argued before the court and the foreclosure clerks. Any argument may have caused the process to resolve even slower.
–Bradley A. Coxe is a practicing attorney in Wilmington, NC who specializes in Personal Injury, Medical Malpractice, Homeowner's Associations, Contract and Real Estate disputes and all forms of Civil Litigation. Please contact him at (910) 772-1678.