Some Arizona associations are currently facing the challenge of dealing with owners who are habitually behind on their assessment payments. Sometimes these owners don’t remit payment for several years, and, some owners withhold assessments for months until they are finally contacted by the association.

Honestly, right now, Arizona HOAs/condos shouldn’t have a large number of owners not paying assessments. The current economic climate in Arizona (high property values, low interest rate, low “for sale” housing inventory plus lots of equity in property) combined with all the federal and state Covid-19 stimulus money has prompted many owners to pay their assessments on time. However, our firm has noticed that some associations still have one or  two large delinquent owners “lingering” on their books. Maybe the board doesn’t know what to do to get these owners to pay. One thing our firm knows for certain is that inaction on these files and letting them continue to sit is not a good idea right now.

When it comes to collecting delinquent assessments from owners, foreclosure of the association’s lien can be a very effective collection tool. In order to foreclose on a lien for past due assessments, an owner must owe at least $1,200 in unpaid assessments or they must fail to remit payment to the association for one year, whichever happens first (A.R.S. 33-1807/A.R.S. 33-1256). Associations should be doing a financial analysis prior to instituting a foreclosure, and, the association should only foreclosure on the property if the owner has equity in the property.

Due to many factors (as outlined above), when pushed with the threat of a foreclosure, or actual foreclosure proceedings, owners will pay in full, refinance or sell their property. Or, if the owner doesn’t do this, an investor will buy the property at the sheriff’s sale.

Once the Association obtains a foreclosure judgment against an owner, an association can ask the sheriff’s office to sell the property at a sheriff’s sale. These sales are public and many potential purchasers attend these sales. If the property is sold at the sale, the association’s foreclosure judgment is paid. In addition, our office has seen a trend the past couple of years that has been very beneficial for associations. Nearly all of the sheriff’s sales our clients have scheduled in the past two years have been cancelled because the owner pays the entire amount owed in order to avoid having the property purchased at a sale. This appears to be due to the current state of the housing market (homes are selling quickly and over asking price) and due to the low interest rates (delinquent owners are able to refinance their first mortgages and the amounts owed to the Association are paid). This is a trend that we expect to continue so long as the market stays hot and interest rates stay low.

What does this mean for associations? Foreclosing an assessment lien, when the right conditions exist, is a WIN/WIN for the Association. If your association has delinquent owners, contact us to discuss your collection options so you can take advantage of this conditions and collect any past due balances. Our firm will do a free credit analysis for you on the owner and will provide you with valuable feedback to help your association get the owner to pay.

For more information on the collection of delinquent assessments, visit our Cheat Sheet entitled, Our Firm’s Secrets to Effective Collection of Delinquent Assessments & Available Legal Remedies.


Right Now Foreclosure is an Effective Tool for Collection of Delinquent Assessments