“Every right implies a responsibility; Every opportunity, an obligation; Every possession, a duty.”
– John D. Rockefeller, American Industrialist
If monthly dues remain unpaid when the property located in a gated community is sold or purchased, who pays for the arrears?
EC purchased a lot in a subdivision in 1995. Since it was a property for investment purposes she just did not bother much about it until it was time for her to sell the property. However, she learned that she cannot sell the property until the unpaid monthly dues of the Homeowners’ Association (HOA) is fully settled.
She wrote to ask: (1) if she has the obligation to pay the monthly dues computed since 1995; (2) does she have the right to refuse the to pay the arrears in the monthly dues; and (3) what options are available to her to check the legality of the HOA dues being collected?
Monthly dues are the lifeblood of a HOA. The dues and other special assessments are used to fund the day-to-day operations and maintain the community facilities in the subdivision project. Without proper maintenance and upkeep of the facilities then the value of the properties inside the subdivision does not appreciate as much. Worst of all, the property values may depreciate over time.
All legally registered HOAs in the country assess, levy and collect some sort of monthly dues. It is legal because it is provided for in the By-Laws of the HOA. Having said that, one must bear in mind that EC can sell her property despite having arrears in the monthly dues.
The HOA cannot stop the lot owner from selling the property to a willing buyer. But, when purchasing a property inside a subdivision project the buyer or the buyer’s agent should check if the monthly dues are updated.
Before we answer the questions of EC, it must first be determined whether the HOA is registered with the HLURB prior to 2010 (before the passage of RA 9904). If the HOA is duly registered with the HLURB then it is a duly constituted HOA.
If provided for in the Deed of Restrictions, a lot owner automatically becomes a member of the HOA even though he/she has not built a house on the lot or has not introduced an improvement thereon. It’s like joining a Country Club. Even if you do not use the facilities or have not stepped inside the Club, you will be assessed a monthly due as a club member.
Hence, the obvious answer to the first question of EC is yes, she has the obligation to pay the monthly dues that have not been paid since the time she purchased the lot in question. But, does she have the right to refuse to pay the arrears in the monthly dues.
Well, it depends…
If the HOA is not duly registered with the HLURB then EC has no obligation to pay the monthly dues that they are assessing you because it is without basis in law.
If the HOA is duly registered and its registration has not been revoked by HLURB, then EC has the legal obligation to fully settle any and all outstanding monthly dues assessed by the HOA.
Although she has no choice but to pay the arrears, she has a right to check the legality of the monthly dues being collected by the HOA. What do we mean by this?
A majority of HOAs today have not updated their Articles of Association and By-Laws as mandated by Republic Act No. 9904. Hence, there is a great possibility that the increase in the amount of monthly dues to be collected have not undergone the proper legal process to become a valid and legal action of the Board of Directors/Trustees of the HOA.
So, the refusal to pay the arrears as assessed by the HOA must be made on solid legal grounds. First, one must check if the increase in the monthly dues is a valid action by the Board of Directors of the HOA.
Absent any Board Resolution duly signed and submitted to the HLURB, then EC has the right to refuse the arrears as computed by the HOA. One must request that the correct rate indicted in the HOA By-Laws should be used in computing the arrears in the monthly dues.
Second, it must be emphasized that any increase in the monthly dues of the HOA must be presented in the General Membership Meeting for its approval. Absent the approval of the majority of the HOA membership, any increase in the HOA monthly dues assessed on its members is outright illegal and have no basis in law.
Armed with these 2 grounds, one must question the legality of the increase in the HOA monthly dues before the current HOA Board. Thereafter, if no action is done by the Board then a compliant should be filed with the HLURB.
However, it is always best if things can be settled amicably instead of undergoing a costly and, oftentimes, lengthy litigation process.
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