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Using mediation to resolve HOA foreclosure disputes

On Behalf of | Jun 7, 2024 | Real Estate Law

Foreclosure can be tough for everyone involved, especially within a Homeowners Association (HOA). When foreclosure is looming, both community relationships and financial stability are at risk. In such cases, mediation can be a powerful, less aggressive and more cost-effective solution compared to court proceedings.

What is a foreclosure?

Foreclosure is a legal process that ends a homeowner’s right to their property. When a homeowner fails to pay their community dues, the HOA can place a lien on and foreclose their property. However, the HOA can only initiate foreclosure if the unpaid dues amount to at least two months’ worth of contributions. Additionally, the HOA must provide the homeowner with at least 60 days’ notice before moving forward.

Understanding mediation in foreclosure

Mediation involves a neutral third party, known as a mediator, who facilitates a discussion between the involved parties to help them find a fair solution. Unlike a judge or an arbitrator, the mediator does not decide the case but helps both sides understand each other better.

In the context of foreclosure, mediation can address issues such as payment plans, lien priorities and other financial disputes that might lead to further legal battles.

How should the HOA address foreclosure through mediation?

HOAs need a clear plan to smoothly resolve disputes through mediation. They should suggest mediation early if a homeowner struggles to pay dues to prevent potential foreclosures. During mediation, it is important for the HOA to communicate openly, explaining the financial impacts of non-payment and exploring all possible solutions. The HOA should also be flexible and fair, seeking compromises that respect the homeowner’s situation while maintaining the community’s financial health. This approach makes mediation a practical and effective way to resolve disputes.

The benefits of legal guidance

Mediation is a great option, especially when both parties are open to dialogue and seeking a fair resolution. In such situations, consulting with a lawyer can be crucial. A lawyer can provide legal guidance, protect the rights of both parties and help prepare a clear strategy for mediation.

With the right approach and professional guidance, mediation can lead to effective solutions that respect both individual circumstances and the community’s well-being.