Homeowners’ Association Foreclosed on Soldier’s Home For Failure to Pay $800 in Fee — Selling the $300,000 Home for $3500

When Michael Clauer went to Iraq as a captain commanding over 100 soldiers in Iraq, he was likely contemplating many potential dire consequences, but he probably was not thinking about the threat posed by his homeowners’ association. Because Clauer’s wife did not pay the homeowners’ fees, the association foreclosed on his $300,000 house and sold it for $3,500. They owed only $800. The story reveals the gross abuse allowed under a Texas law which gives such associations the right to foreclose on homes for failure to pay ANY amount — and to foreclose without a court order. Select Management Co., which runs the development, has refused any comment.

Michael, 37, went on active duty in February 2008 and, after his deployment, his wife May went into a depression, worrying about him and a ten-year-old and a one-year-old with a serious seizure-related disorder. She stopped opening mail because she was afraid about bad news about Michael and reportedly did not see the due notices for the associational fees.

Even if this were a case of knowingly failing to pay the fees, what happened in the case is outrageous. Without any court order, the association foreclosed on the $300,000 and then sold it for $3,500. The mysterious buyer then promptly resold the house to a third person.

Michael says that the Homeowners’ Association officers live near him and received personal visits to collect on undue fees, but his wife only received letters. They also claim that the homeowners’ association’s lawyer filed an affidavit wrongly claiming that neither of the Clauers was on active duty — since laws protect servicemembers in such cases. It should be noted that not just servicemembers should be protected from such actions. This is an abusive (and highly suspicious) series of transactions.

Despite widespread stories of such foreclosure abuse without court orders, legislators in states like Texas appear unwilling to do anything to create a level of judicial review. Banks and associations are able to act unilaterally against families with little procedural protection for families (here). These banks and associations tend to carry far more weight with politicians than do average citizens.

For the full story, click here.

56 thoughts on “Homeowners’ Association Foreclosed on Soldier’s Home For Failure to Pay $800 in Fee — Selling the $300,000 Home for $3500”

  1. I would like to say, that I missed one year payment in 2007 of about $200. I did use web bill pay after that. Every year since then, my payments have been returned. Now they want my under water home for past years and interest? They returned my payments! This HOA is a scam!!

  2. Yes this sounds a little fishy as far the 3500 settlement and sale of the 300,000 dollar home. because if there is no equity in the home, then there will be no mony left to pay the hoa dues. I have a lawyer trying to suck $23,000.00 out of me for the past 3 years. that means the monthly dues are $639.00. Think about that, who in their right mind would pay that for monthly garbage pick up and street sweeping fees as well as water bills. But thats what I have in writing from a hoa lawyer. The monthly dues are currently $305.00 a month. Imagine this, 4 owners paying this amount each month ($1220.00) a month or $14,640.00 a year per Unit of HOA Owners. What this gets spent on is a mystery. But it is not being spent on my unit. Plus I know what it should cost to upkeep a house of similar size. There no desclosure here, and thats what I want. WHAT A RIP OFF. We have to mass together to review these rip off laws and hold board members and home owners responsible

  3. I sincerely doubt that the $3500 price tag was the full story on the sale. Typically, when these foreclosures occur, the sale is still subject to the first mortgage. For example, let’s say that this $300,000 house was (like many today) subject to a $320,000 mortgage because the economy tanked. The purchaser may have bought it for $3500 from the association (which would have covered the HOA fees, legal fees, and late fees) but there would still be the $320,000 lien from the first mortgage holder. That debt has to be paid, negotiated downward, or otherwise resolved or the lender will foreclose against the purchaser. No free lunch here. HOA’s typically pursue these actions under the assumption that an owner who is unwilling to pay their fees, even under notice of foreclosure, is probably struggling with the mortgage as well. Typically, these result in a few short months of rental income to compensate for overdue fees – or a sale to an investor that views it as a short term investment until the bank comes it to call in their note.

    Yes, they should have ascertained the owner’s military status, but the wife was likely a legal owner as well and she was the one who was there. As an adult, she is accountable too. Moral of the story: Pay your bills. If you are going on active duty and your spouse isn’t responsible, appoint someone who is to look after your finances or get her some free financial counseling at the base family services center. Another thought… allotment, USAA bill pay. They are there for a reason Captain.

  4. Would like to know more about the unintended consequences of this law relative to condominium owners, when active duty military personnel don’t pay their maintenance fees. When their is no mortgage, and they are making a career of the military, this is a big problem. Showi
    G reverence should not include being evploited.

  5. Let me set the record straight concerning the comments about the children being removed from the mother’s care because of severe depression.

    As someone who has suffered from Bi-Polar depression for 15 years, I can tell you that the ONLY thing that kept me going at all was my children. The ONLY thing that kept me from downing a bottle of pills or slicing my wrists was the thought of my children having to witness my death. I know MANY depression survivors (because yes, every day that we are alive, we have survived one more day of our mental hell), who have only managed to regain any form of a normal life was because during the darkest moments, they HAD to keep going for thier children. MOST depression sufferers are not dangerous to ANYONE but themselves and are actually very diligent to take care of the OTHER people in thier life. By removing her children, especially without any cause of abuse or neglect, you would effectively been assuring her death. What else would she have had to live for?

    Also, I was a Navy wife for 12 years. Most of that during the Operations Desert Shield and Desert Storm. The worry and stress that the spouse go thru here at home are equal, if not greater, than that of the deployed service member. At least the service member has information of what is going on and who is involved. The spouses only have what little bit of information gleaned from a TV crew that may or may not be telling the truth. Even the letters we recieve from the service member is lacking in any true information due to security of ship movements and orders, so this allows our minds to conjure the scariest scenarios imaginable.

    It is NOT uncommon for a spouse to refuse to open mail except from the service member for fear of “bad news”. Please keep in mind that MANY military personnel use auto pay or direct deposit for thier usual monthly bills. So it is NOT out of the realm of belief that this family did also, which would explain why her other monthly bills were paid but the HOA dues were not.

    Before anyone starts disecting this woman’s ability as a mother because she suffers from depression, do some homework and research the subject. Before anyone starts disecting her ability to survive as a Military spouse, become one yourself and see how well YOU manage in a time of war.

  6. mespo,

    I wonder if the excessively low sale price (which was presumably recorded–I know it is where I live) provides constructive notice that the sale was in bad faith / was invalid? If so, the new owner wouldn’t be a BFP.

  7. This is appalling, and the heads of that HOA should be ashamed of themselves!! I wish those in charge could be forced to foot the bill for a new home for this family without the expense passing on to the other members, but I know they’re likely to be protected. More protection for the wrongdoers is nothing new in this country.

    Crap like this is why I will NEVER live somewhere with a HOA. What good is buying a home is you have to get permission to take out the white roses to put in red?

  8. I have lived in Texas, and this sort of thing is actually very common there, as well as a few other southern states. A few attorneys will talk a neighborhood into forming a Homeowners Association, and then those same attorneys make bundles of money in fees, fines, and foreclosures. Many of the victims are defenseless elderly people living on retirement income who find themselves homeless when they don’t pay up. It has become a racket run by the most cold blooded people you will ever find.

  9. Buddha:

    you couldn’t get 5 or 6 people to lend them $150-200? It isn’t hard times but a loss of the American spirit, we rely too much on government and not enough on neighbor helping neighbor like it used to be when you pitched in to help with the harvest or something else. And it wasn’t in a spirit of altruism but in rational self interest. Everybody today thinks government can do everything for everyone.

  10. Isabel darcy:

    “If the foreclosure is invalid, it doesn’t make any difference if there was a BFP. Besides, it looks to me like everyone involved here, including the ultimate owner, has dirty hands.”


    50 U.S.C.§ 521

    (a) Applicability of section. This section applies to any civil action or proceeding in which the defendant does not make an appearance.
    (b) Affidavit requirement.
    (1) Plaintiff to file affidavit. In any action or proceeding covered by this section, the court, before entering judgment for the plaintiff, shall require the plaintiff to file with the court an affidavit—-
    (A) stating whether or not the defendant is in military service and showing necessary facts to support the affidavit; or
    (B) if the plaintiff is unable to determine whether or not the defendant is in military service, stating that the plaintiff is unable to determine whether or not the defendant is in military service.


    (g) Vacation or setting aside of default judgments.
    (1) Authority for court to vacate or set aside judgment. If a default judgment is entered in an action covered by this section against a servicemember during the servicemember’s period of military service (or within 60 days after termination of or release from such military service), the court entering the judgment shall, upon application by or on behalf of the servicemember, reopen the judgment for the purpose of allowing the servicemember to defend the action if it appears that—-
    (A) the servicemember was materially affected by reason of that military service in making a defense to the action; and
    (B) the servicemember has a meritorious or legal defense to the action or some part of it.
    (2) Time for filing application. An application under this subsection must be filed not later than 90 days after the date of the termination of or release from military service.
    (h) Protection of bona fide purchaser. If a court vacates, sets aside, or reverses a default judgment against a servicemember and the vacating, setting aside, or reversing is because of a provision of this Act that action shall not impair a right or title acquired by a bona fide purchaser for value under the default judgment.

    The bfp is a bigger problem than you acknowledge.

  11. Byron,

    I didn’t know you grew up in “Leave It To Beaver” or “Gunsmoke”. I won’t disagree that 60 years ago many people had a better sense of decency and the difference between right and wrong, but 60 years ago there were still abusive jackasses like this HOA crowd and their soon to be sanctioned if not disbarred counsel. That ideal you refer to never really existed but rather exists (if at all) like it does today: in the quality of character of the individual actor. Had me or you been this guys neighbor? Sure. The right thing may have gotten done. Plus you discount these are hard times. It may not be that his neighbors didn’t want to help, but rather couldn’t. This little HOA faux pas is chump change compared to some of the chicanery that went with the real estate transactions surrounding future rail lines as well as the gold and oil rushes. Evil and opportunism have been around since before the invention of language.

  12. 60 years ago in this country a neighbor would have paid the 800 dollars or bought the house and given it back to the Clauers.

    WTF has happened to us?

  13. Maybe someone can answer this for me. If the court finds that the HOA sold the house in violation of the SSCRA, will the HOA also have to pay the soldiers court costs?


     All persons on Federal active duty
     Army, Navy, Air Force, Marine Corps, Coast Guard
     Reserve forces while on active duty
     National Guard and Air National Guard in federal status (Title 10 orders)
     Inductees into the services
     Public Health Service officers detailed for service with Army or Navy and
    NOAA officers


     Dependents receive protections of Article III provisions
    (Sec. 536)
     Eviction, mortgage foreclosure, termination of leases
     Persons secondarily liable on service members’
    obligations (Sec. 513)

     The Act applies to all courts
     State, federal, city, county
     Big and small
     All means all
     What about “all” don’t you understand?


     Default judgments (Sec. 520)
     Theoretically, cannot obtain a default judgment without either an affidavit of non-military service or an attorney appointed
     Theory vs. practice
     Reopening default judgments
     May be re-opened any time up to 90 days after release from active duty
     Must show prejudice and meritorious defense.

     Section 525
     Statutes of limitation do not run during the period of service
     For or against the service member
     No requirement that material effect be shown.

    EVICTIONS –Sec. 530
     Self-help evictions prohibited
     Must have court order to evict
     Applies if rent is $1,200 or less per month
     Court can stay eviction for 3 months (or enter such other order as may be just) if service materially affects ability to pay rent
     Criminal sanctions for violation.

     Property owned pre-service and at commencement of
    foreclosure action
     Real and personal property
     Court may/shall stay unless no material effect shown
     No valid foreclosures/seizures without court order during service + 90 days
     Criminal sanctions possible.

     Contract for purchase of real property
     Court can stay enforcement of obligation during military service plus period equal to period of military service plus remaining period of obligation
     Any other obligation
     Court can stay enforcement of obligation during military service plus period equal to period of service
     Deferred payments must be paid over the “extension period”, plus new payments as they accrue


    In Balconi v. Dvascas, the monthly rent was $340, but the court held that a service member’s child and ex-wife were eligible under the Act for protection against eviction.

    Criminal sanctions. Criminal sanctions include 1-year confinement and fine as provided in title 18, U.S.C. for taking part in an eviction in violation of this section.

    (Too dang bad its only a 1 year misdemeanor.)

    However, the Attorney is still subject to Due Diligence. They may be sanctioned and/or even disbarred for filing “Known” fraudulent documents with the court.

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