Can the HOA Fine a Family Trust?
QUESTION: We have a number of condos owned by family trusts. If we have to pursue the owner for rules violations or unpaid assessments, who do we go after?
ANSWER: For fines and delinquent assessments, go after the trustee of the trust.
Trust Deed. You cannot go after the trust itself because it is neither an entity nor a legal person such as corporations are. A trust is a mechanism for transferring assets to a beneficiary without going through probate. As such, it cannot own property or be sued.
Because a trust cannot own property, a condominium in a living trust must be owned by a trustee on behalf of the trust. That person’s name appears on a recorded deed similar to the following: “John D. Smith as Trustee of the John D. Smith Family Trust dated 1/1/15.” Or, “Mary Jones as Trustee of the John D. Smith Family Trust dated 1/1/15.”
Rules Violations. If the occupants of the unit violate the rules, you call the trustee in for a hearing and levy fines against the trustee.
Collections. For delinquent assessments, you can go into court for a money judgment against the trustee in his/her capacity as trustee of the trust. Or, if you decide to foreclose, you record a lien against the property. The lien can be foreclosed and the unit sold nonjudicially without going into court. Fines cannot be included in a nonjudicial foreclosure but they can be included if you pursue a judicial foreclosure through the courts.
RECOMMENDATION: Contact the ADAMS|STIRLING office for more details on collection options at firstname.lastname@example.org.
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