Why Georgia Condominium Owner's Fight Against HOAs Could Have Nationwide Implications

A legal fight is brewing in Georgia over how much authority the state's Homeowners' Associations (HOAs) can exercise over condominium community residents. The frustrations that Georgia condominium owners are voicing have led to a bill in the state legislature to curtail HOAs authority to foreclose on residents who violate the condominium rules. Since the issues of Georgia condominium owners are common in HOAs nationwide, the bill's fate could have national repercussions.

It's no secret that HOAs have wide-ranging authority over condominium community residents. This authority is rooted in the fact that condominium owners also own a proportional share of their community's common areas, such as the pool and the parking lot. HOAs exist to handle the management of day-to-day issues in the condominium community. HOAs have three main responsibilities:

• Managing the condominium community's finances (e.g., collecting HOA fees, and paying bills such as insurance or property taxes)
•  Scheduling and overseeing maintenance of the condominium community's common areas (e.g., swimming pool, parking lot, roof)
•  Setting and enforcing the condominium community's rules

Both joining the HOA and agreeing to abide by its rules are considered "covenants" of condominium ownership. The condominium rules give HOAs the power to charge condo fees or levy assessments on condominium owners for common area repairs. However, the rules also give HOAs the power to lien or even foreclose on condominium owners for a variety of infractions, like failing to pay dues and assessments or breaking the HOA rules. 

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This is where the issue gets thorny. Theoretically, Georgia condominium owners can lose their property if they have unpaid association fees or assessments totaling more than $2,000. Condominium owner balances can easily exceed that threshold because Georgia law allows HOAs to charge late fees and interest on past-due association fees or assessments. It also allows HOAs to place liens and force sales on condominium owners who are more than $2,000 in arrears on dues or assessments.

Many Georgia condominium owners feel like the $2,000 threshold is too low and gives HOAs too much authority to strip condo owners of their hard-earned properties. One property owner reported that they had their condominium sold out from underneath them at a foreclosure auction for $3.25 due to late fees and interest added on to their past due condo fees, which were only $1,600/year.

Another owner received a $1,200/mo wage garnishment from his HOA to pay for weed removal and landscaping fees that had mushroomed to $36,000 after late fees, interest, and other penalties were applied to the balance. These types of HOA liens leave many owners in a position where their only way out is to sell the property and use the proceeds to pay back the HOA.

Once the sale is done, many former owners are left with nothing. Their down payment, their equity, and all the work they did to buy the condominium can disappear over just $2,000. Horror stories like this from Georgia citizens who have lost their properties despite paying the monthly mortgage have been playing out for many years and three state legislators want to put a stop to it.

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Sandra Scott (D-Rex), Viola Davis (D-Stone Mountain), and Kim Schofield (D-Atlanta) have teamed up to reform Georgia's condominium laws with the "Property Owner Rights and Responsibility Act," which they have introduced into the state house for consideration. The bill's most important provision would be eliminating the $2,000 foreclosure clause in HOA agreements.

Rep. Scott spoke in defense of the bill, saying, "We drafted this bill because no one should lose their home because of HOA fees/assessments. When a person pays their mortgage and taxes, they have paid the two bills that make them homeowners. People's American dream of Homeownership should not be taken away because of fees/assessments."

She and her colleagues see this as an issue of fundamental fairness. They believe the current rules give HOAs too much authority to upend the lives of individual property owners over too small an amount of money. Considering that many condominiums in Georgia cost several hundred thousand dollars (or more), the thought of removing a property owner because of $2,000 worth of past-due fees does seem somewhat excessive.

However, HOAs do still need to have some ability to enforce rules and collect assessments that are needed to maintain a functioning community. If the bill does pass, it will likely be a compromised version of the one currently on the table. With that said, the problems that led to this legislation being proposed in the first place are not limited to Georgia. Condominium owners all over the country have long bristled at the authority their HOAs have.

That's why it's a safe bet that condominium owners, HOAs, and state legislators all over the country will be monitoring the situation in Georgia very carefully. If the Property Owner Rights and Responsibility Act passes, it could lead to a nationwide movement to reform HOAs and curtail their authority. That means a radical change to the parameters of condominium ownership for millions of Americans could be in the making. 

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