How HOA Dues Can Affect Your Credit Rating

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AOLIf you are experiencing problems paying HOA dues, a free credit report can show you if anything has been reported.
By Gerri Detweiler

If you live in a community within a homeowners' association, you probably have to pay association dues. They can run anywhere from less than $100 a year to more than $1,000 a month, depending on the community. What happens if you don't pay? Will it ruin your credit rating?

It certainly can, as some of our readers have found out:
  • "Not Guilty" is dealing with damaged credit as the result of judgment arising from unpaid (and disputed) HOA dues.
  • "Justneedmoretime" can't get a loan modification due to the lien for homeowner dues placed against the property -- and has received a court summons.
  • "Sue" has also been taken to court after withholding her dues because the association did not make repairs she believes they were required to make.

All of these readers are facing severe negative items on their credit reports that can significantly drop their credit scores.

What can HOA members do to protect themselves?

First, understand that dues typically don't show up on credit reports unless there is a problem. Mike Hunter with Horack Talley in Charlotte, North Carolina, represents more than 500 HOAs in that state. He says, "None of the HOAs I represent nor their management companies report debts to the credit bureaus. The only way they could show up is if a lien, foreclosure or judgment is filed. The reporting agencies have people that comb the public records for this information, and that's the only way it can show up in a homeowner's credit report."

How to avoid credit damage: Having trouble paying your dues? "Try to make a payment arrangement with the HOA to get you caught up," suggests Mike Boyd who has been the president of his HOA for 13 years. "It's also best to do this before your account is sent to the HOA's attorney for collection, because as soon as that happens you will also be liable to pay all the attorney's fees and expenses for handling this matter," he says.

Take this obligation seriously. Don't assume that just because you are delivering the check to someone in your neighborhood that you can let it slide if you're short on money that month. "HOA obligations due on a property are legally binding promises that are enforceable under the law," warns Matthew Reischer, Esq., CEO of "HOA collections can result in assessments, interest, violations, late fees and fines. The debt owed can also result in a lien on the property or be a basis for wage garnishment proceedings," he adds.

Monitor your credit. If you are experiencing any problems paying your dues, get your free credit report once a year to see whether anything has been reported. It is also a good idea to get your free credit score monthly so you'll be aware if it changes dramatically.

And before you buy a home within one of these communities, make sure you read and understand the deed restrictions. "If you paint your house, you had better pick exactly the right color if you live in a home that is subject to a homeowners' association. If you are late on your assessments, you may find yourself out of a home," warns Kenneth G. Eade, an attorney who has seen both of those situations and plans to incorporate those kinds of problems in his next novel in the Brent Marks Legal Thriller Series. "These (battles) have diverted the income that my clients could have used to remedy these petty problems when HOA busybodies would rather litigate to get their way than to compromise."

"Does it affect your credit rating?" he asks. "That and all other aspects of your financial life!"
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