Allen Baker walks along a trail maintained by the Oak Knoll Meadows Homeowners Association. - Jamie Lusch

Foreclosure fallout: Homeowner association dues lag

ASHLAND — With more than 18 acres of common space to maintain, the Oak Knoll Meadows Homeowners Association finds its budget stretched as it tackles deferred maintenance projects and rising water bills.

In some neighborhoods it might have been simple enough to raise the dues, said Allen Baker, the association president. But with the majority of the 107 homeowners now in their 70s and 80s, it's not feasible.

"Everything is getting more difficult," Baker said.

Lately, the association's funding has encountered another kind of trouble — the ripple effects from foreclosures.

Oak Knoll Meadows has plenty of company, as cashed-strapped homeowners throughout the region have fallen behind on homeowner association fees. Even if liens are filed, if the house goes into foreclosure and goes to auction, lenders are in first position and past association dues disappear.

"It's widespread," said Ellen Naumes of CPM Real Estate Services, who manages 36 of the hundreds of local homeowner associations ranging from six units to 309 units. "The last thing people often pay are their dues."

Baker said an acquaintance who handles finances for several home associations in Ashland says the problem is greater in newer developments where foreclosures are common.

Baker and his wife sought a neighborhood with a home association when they moved to the Rogue Valley from Alaska in 2003. An association, they thought, would prevent deterioration. What they didn't count on was economic upheaval that jeopardized financial stability and shook up the real estate market. In some cases it meant owners stopped paying dues.

The owner of a recent foreclosure quit paying dues in 2006 and left owing the association $1,200 before the bank took over the property. "If somebody gets behind, they can walk away from us pretty much with impunity," Baker said. "As far as I know, we haven't filed a lien on anybody.

"People are stretched financially. When they get a bill from the association, they want to pay, but don't have the money. We're one of the first people they won't pay when they can't afford it, because we don't have the leverage."

Baker estimates about half of the people living in the neighborhood are 70 or older, meaning many residents are on fixed incomes. "It's difficult to raise rates," he said. "Our budget is roughly $60,000 a year to get a maintenance guy out two times a week and that costs $40,000. We haven't given him a raise in three years."

With plants, drip systems, sprayers, insurance and one of the biggest water bills in town, lost dues hinder the task.

"We've got one owner close to $4,000 behind right now," Baker said. "That's closing in on 10 percent of our budget. If we get a couple hits, we're in trouble. When a tree falls, that's $1,500 or $2,000 — we don't have a lot of space in the budget for anything like that."

Going to court is an option, he said. "But we don't want to get vilified in any way."

Medford attorney James Stout, who deals with real estate and property management issues, acknowledges homeowner associations are stuck between the role of keeping neighborhoods in line with covenants and not being able to collect from members without money.

"The problem is the banks won't pay homeowner dues until foreclosure is complete," Stoutt said. "There's a particular problem when someone owns five or six condo units and doesn't pay or owns five or six rentals. If they don't pay, then that's a big chunk out of (the budget)."

As difficult as it may be, Naumes said, boards need to be firm with their policies on dues and late fees.

"They have to be more strict in collections," she said. "Because the next thing they know, the owner is in foreclosure."

Reach reporter Greg Stiles at 541-776-4463 or email

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