An HOA lien can lead to foreclosure — even if your mortgage is current. Learn how HOA liens work, super-priority liens that can wipe out your mortgage, how to challenge excessive HOA fees and legal costs, and your rights when an HOA threatens your home.
When you fall behind on HOA dues, the HOA can record a lien against your property. Unlike a mortgage, the HOA doesn't need to go to court to create the lien — it's automatic under most CC&Rs and state law. Once recorded, the lien gives the HOA the right to foreclose on your property to collect the debt. This can happen even if your mortgage payments are current.
In approximately 20 states, a portion of the HOA lien has super-priority status — meaning it takes priority over even the first mortgage. When an HOA forecloses a super-priority lien, it can wipe out the mortgage entirely. The buyer at the HOA foreclosure sale gets the property free and clear of the mortgage.
States with super-priority HOA liens include: Nevada (NRS 116.3116), Colorado, Connecticut, Florida, Nevada, Washington, and others. In Nevada, the super-priority amount is 9 months of unpaid assessments. This means if your HOA dues are $200/month, a $1,800 super-priority lien can wipe out a $300,000 mortgage. Mortgage lenders know this and will often pay the HOA to protect their interest.
Demand a complete accounting of all charges. HOAs frequently add improper fees, inflated legal costs, collection charges, and penalties. Many states limit what HOAs can charge and require reasonable fee structures. Challenge every line item you believe is excessive or unauthorized by the CC&Rs.
State law typically requires specific notices before an HOA can record a lien — notice of delinquency, opportunity to cure, board vote authorization, and proper recording with the county. Missing any of these steps can invalidate the lien.
Most HOAs prefer payment over foreclosure. Offer a realistic payment plan. Get it in writing. Once a payment plan is in place, demand the lien be released or subordinated.
Your mortgage lender has a strong interest in preventing HOA foreclosure. Notify them in writing about the HOA lien. In super-priority states, lenders often pay the HOA to protect their first mortgage position and add the amount to your loan balance.
Chapter 13 bankruptcy can stop HOA foreclosure and spread past-due assessments over 3-5 years. Post-petition assessments (after filing) must be paid going forward. Chapter 13 is often the most effective tool for dealing with aggressive HOA foreclosure actions.
HOA threatening foreclosure? We challenge excessive fees and negotiate payment plans — before the sale.