Owners who live in a condominium, single-family house, or townhome that belongs to a common interest community are responsible for paying dues and assessments to a condominium association (COA) or homeowners’ association (HOA). When the homeowner defaults these dues or assessments, the association can foreclose on their condo, townhome, or house in most states.
Most COA or HOA have the power to place a lien on properties based on their governing documents, which include the Declaration of Covenants, Conditions, and Restrictions (CC&Rs) and bylaws, once a homeowner defaults on assessments. In some cases, these liens are automatically attached to the homeowner’s property.
Besides the past-due assessments, the association may impose other charges, based on state laws and the association’s governing documents. These can include:
- Late Charges
- Attorney’s Fees
In some states, a lien for delinquent assessments has priority over a lender’s mortgage and is called a super lien. With a Super Lien the association not only collects all money that was due in unpaid assessments, late charges, legal costs and any other fees but it also eliminates the first mortgage when it forecloses on the lien.
22 states have some type of Super Lien law where associations can file liens that becomes superior to a mortgage holder or investor:
- District of Columbia
- New Hampshire
- New Jersey
- Rhode Island
- West Virginia
Many owners with past due fees and assessments share the common misconception is that the association cannot foreclose if they are current on their mortgage payments. In reality, the association’s right to foreclose has nothing to do with whether or not mortgage payments are up-to-date.
An association will typically incur legal fees to file a lien, ranging from hundreds to thousands of dollars, depending on local and state laws, and complexity of the case.