Tuesday, May 25, 2010

Homeowner Hammers HOA, Attorney In Court For "Unreasonable Collection Practices" In Foreclosing On House Over Tiny Amount In Unpaid Dues

In San Antonio, Texas, WOAI-TV Channel 4 reports:
  • When the HOA foreclosed on [Kent] Hern because he owed a couple hundred dollars, he took them to court. Hern lives on the north side of town in the Hidden Forest subdivision. He fell behind on his HOA payments a few years ago while he was out of the country on business. No matter, Newton still filed the papers with Bexar County to take Hern's house.

  • "He's the ringleader for attorneys who foreclose on homes for HOA's," says Hern about [local attorney Tom] Newton.(1) "When I saw there was a number of HOA's that had actually taken these steps to foreclose on homeowners for such ridiculously small amounts of money, we just decided that I was going to fight it because it just wasn't fair," he added. A Bexar County jury agreed with Hern, saying the HOA and Newton engaged in "unreasonable collection practices" while foreclosing on his house over such a tiny amount in unpaid HOA dues.

  • The jury also thought the massive amount of legal fees added to the dues was completely out of line.(2) Hern was awarded a total of $22,000; $11,000 of which was to cover his attorney's fees.

  • Hern's attorney, Peter Kilpatrick, took Hern's case because he's tired of seeing people lose their homes over something so small. "This is a message to those HOA's that even though homeowners should pay their assessments, and on time, when they don't, they have rights too and they should not be plowed over with these gestapo-like collection tactics," explained Kilpatrick. Kilpatrick says part of the problem is in the contract the HOA's sign with Newton. It says the HOA is not allowed to accept past due payments from homeowners without Newton's approval.

For more, see Homeowner beats HOA lawyer in court.

(1) Attorney Tom Newton reportedly represents almost all the HOA's in San Antonio, and if your home is on the auction block, there is a good chance he is the guy you'll have to deal with, the story states.

(2) This alleged practice sounds similar to the racket mortgage loan servicers run with homeowners. The moment a payment is missed, the door is open to play "let's run up the fees and squeeze the homeowner."