HousingWatch told you about Captain Michael Clauer and his family of Frisco, Tex., a community about 20 miles north of Dallas, who lost their home to foreclosure for failure to pay $977.55 in HOA dues. Well, on Monday, the Clauers settled with the Heritage Lakes Home Owner's Association, whose management company, Select Management, foreclosed on their home and sold it to a bidder for $3,500.
The good news: The Clauers get back title to their home. Other details of the settlement, however, are not available as the court has imposed a gag order on the case. Also, ABC's Nightline is in Dallas shooting a segment on the Clauer's ordeal that is scheduled to run Friday. The Clauer's attorney, Barbara Hale, was not permitting interviews for her client during the settlement process.
In Texas and about 30 other states, HOAs have the power to foreclose on your home if you fail to pay your home association dues, even if you own it free and clear, as the Clauers did. (Capt. Clauer's name was not on the title originally.) May Clauer says that she got into a funk over her husband's deployment to Iraq and failed to pay bills. She let the mail pile up, even the certified letters. May and her parents owned the $300,000 Frisco home free and clear -- May's parents apparently helped her buy the home.
Crucial to the case was Clauer's military status, and whether he was active when the home was foreclosed on. A federal law, the Service members Civil Relief Act, protects those on active duty from certain legal and financial obligations, including foreclosure, without going to court. Captain Clauer was on active duty from Feb 15, 2008 to October 9, 2009.
But a representative for Heritage Lakes said the HOA checked with the military and were told he was not on active duty.
There may be a second happy outcome for this story: the case has brought the power of HOA's into the limelight in Texas, where many are calling for legislation to rein in their power.
"There is no next step. If the homeowners association isn't responding, there ought to be a neutral mediator for people to go to with complaints," Realtor Shad Bogany told the Dallas Morning News. State senator Royce West of Dallas says he hopes to use the Clauer's story in the upcoming legislative session to make such foreclosures are illegal.
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