Alabama HOA Foreclosures
If you default on HOA or COA dues and assessments in Alabama, the association can foreclosure on your condo, townhome, or house.
If you live in a house, condo, or townhome that is part of a common interest community in Alabama, you are most likely responsible for paying dues and assessments to a homeowners’ association (HOA) or condominium association (COA). If you don’t pay, in most cases the HOA or COA can get a lien on your property that could lead to a foreclosure.
Read on to learn about the particular requirements for HOA and COA foreclosures in Alabama.
Alabama HOA and COA Lien Laws
Alabama has no law specifically governing the actions of HOAs. Alabama HOAs are usually set up as nonprofit corporations, which are governed by Title 10A, Chapter 3 of the Code of Alabama. However, most rules regarding the operation of the HOA, including those pertaining to assessments liens, will be contained in the association’s Declaration of Covenants, Conditions, and Restrictions (CC&Rs).
For this reason, you really should read the CC&Rs before purchasing a home in a covenanted community. (Find out more about taking a closer look at what's in your HOA's governing and other relevant documents in Before Buying: How to Read the CC&Rs or Homeowners' Association (HOA) Documents.)
Chapters 8 (the Condominium Ownership Act) and 8A (the Alabama Uniform Condominium Act) of Title 35 of the Code of Alabama govern COA activities in the state.
How HOA and COA Liens Work
Almost all HOAs and COAs have the power to place a lien on the property if the homeowner becomes delinquent in paying the monthly dues and/or any special assessments (collectively referred to as “assessments”). Once a homeowner becomes delinquent on the assessments, usually a lien will automatically attach to that homeowner's property.
In Alabama, the COA will have a lien on a condo for any assessments or fines imposed against the owner from the time the assessment or fine becomes due (Ala. Code § 35-8A-316(a)). If you are part of an HOA, check the CC&Rs to learn about the association’s right to place a lien on your home if you don’t pay the assessments.
Charges the HOA or COA May Include in the Lien
An HOA’s CC&Rs will describe any charges that may be included in the lien. For COAs, Alabama law sets out the types of charges that may be included in the assessments lien (Ala. Code § 35-8A-316(a)). Unless the declaration of condominium provides otherwise, the association may include:
- Assessments. The COA can include amounts for unpaid assessments in the lien.
- Late charges. The COA may also impose charges for late payment of assessments against unit owners.
- Fines. The association may levy reasonable fines for violations of the declaration, bylaws, and rules and regulations of the association.
- Other charges. The COA may also impose reasonable charges for the preparation and recordation of amendments to the declaration or statements of unpaid assessments.
- Interest. The COA is permitted to charge interest on unpaid assessments at the rate established by the association, but no more than 18% per year (Ala. Code § 35-8A-315(b)).
- Reasonable attorney fees and costs. Reasonable attorney's fees and costs may be included in a judgment or decree to enforce the lien.
COA Lien Priority in Alabama
A COA lien is prior to all other liens, except for:
- liens and encumbrances recorded before the declaration of condominium
- liens for real estate taxes (and other government charges), and
- a first mortgage or deed of trust that was recorded before the date on which the assessment sought to be enforced became delinquent (Ala. Code § 35-8A-316(b)). (Learn more about lien priority and what happens to a first mortgage in an association foreclosure in Nolo’s article What happens to my mortgages if the HOA forecloses on its lien?)
COA Super Liens
Under certain circumstances, a COA lien for delinquent assessments may have priority over a lender’s first mortgage or deed of trust. This is called a super lien. In Alabama, six months worth of delinquent common expense assessments have super lien status (Ala. Code § 35-8A-316(b)). (Learn more about association super liens.)
Requesting a Statement of Assessments Due From a COA
If you make a written request, the COA must provide you with a statement of the unpaid assessments that are due. If the association does not mail or otherwise provide you with the statement within ten business days after receiving your request, the lien is released. (You remain liable for the debt, but the lien is extinguished.) The COA may charge up to $10 for issuing the statement (Ala. Code § 35-8A-316(h)).
HOA and COA Foreclosures in Alabama
If you default on the assessments, the HOA or COA can foreclose. A common misconception is that the association cannot foreclose if you are current with your mortgage payments. However, the association’s right to foreclose has nothing to do with whether you are current on your mortgage payments. (Learn more about HOA liens and foreclosure.)
In Alabama, a COA may foreclose on its lien in the same manner as a mortgage on real estate, but the association must give reasonable advance notice to the unit owner and all lienholders of record of the unit (Ala. Code § 35-8A-316(a)). (Learn more about foreclosure laws and procedures in Alabama.) (To find out the specific notice and foreclosure procedures that the HOA must follow if you fall behind in HOA payments, read the CC&Rs.)
Statute of Limitations
In order for the lien to remain valid, the COA must bring an action to enforce the lien within three years after the full amount of the assessments becomes due (Ala. Code § 35-8A-316(e)). This is called the statute of limitations. (State law does not provide an expiration date for HOA liens.)
What to Do if You Are Facing Foreclosure by an HOA or COA
If you are facing an HOA or COA foreclosure, you should consult with an attorney licensed in Alabama to discuss all legal options available in your particular circumstances. (See our HOA Foreclosure topic page for articles on HOAs, possible options to catch up if you are delinquent in payments, how bankruptcy can help discharge dues, HOA super liens, and more.)