Is Former Owner Entitled to HOA Credits, or Does New Owner Get the Windfall?

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“I am a prior owner of a townhome in a 7 unit community.  For 2 years, the new owner stopped paying HOA dues and the home went into foreclosure.  The HOA sued her and received monies due from nonpayment of her dues at closing. During that 2 year period the 6 other owners dues increased to pay her share.  Prior to the sale of my unit, her foreclosure went through and all monies were paid back to HOA.

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The board is now looking to provide a credit back to all owners who carried the costs for those 2 years (6 owners, 1 being myself) Since I am no longer an owner but the foreclosure was finalized while I was still an owner, am I entitled to the $800.00/unit credit that the HOA is to payout?  Or is that credit given to the new unit owner who bought the property from me?”

The HOA does not want to keep this money in reserves. The first thing you need to look at is the paperwork relating to the original increase in your dues.  That may indicate what (if any)
agreement there was relating to reimbursement when the back dues were collected.

Second, you need to look at your sale contract and the disclosures that went along with it.  Even if you were entitled to the refund initially, you might be in a situation where your buyers can argue that they knew about the expected refund and adjusted their sale price accordingly, expecting to get the refund themselves.



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Author: House Attorney

A house attorney has answered this question.