Arkansas HOA Foreclosures
If you default on HOA or COA dues and assessments in Arkansas, the association can foreclosure on your condo, townhome, or house.
If you live in a common interest community in Arkansas, 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 more about HOA and COA foreclosures in Arkansas.
Arkansas HOA and COA Lien Laws
HOAs and COAs (often called property owners associations or “POAs” in Arkansas) are governed by the Horizontal Property Act, which is found in Title 18, Chapter 13 of the Arkansas Code. In addition, Arkansas HOAs and COAs are usually set up as nonprofit corporations, and are governed by the Arkansas Nonprofit Corporation Act of 1993 found in Chapter 33 of Title 4 of the Arkansas statutes.
Bylaws and CC&Rs
The rules regarding the operation of the HOA or COA, including those pertaining to assessments liens, can be found in the association’s governing documents such as the bylaws and Declaration of Covenants, Conditions, and Restrictions (CC&Rs). (To find out more about taking a closer look at what's in your association’s governing and other relevant documents, see Before Buying: How to Read the CC&Rs or Homeowners' Association (HOA) Documents.)
Arkansas law specifies that an association is governed by its bylaws, which must include information about the way the association collects payments for common expenses and must be publicly recorded (Ark. Code Ann. §18-13-108).
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, a lien will usually automatically attach to that homeowner's property.
Charges the HOA or COA May Include in the Lien
Typically, an HOA or COA’s governing documents will describe any charges that may be included in the lien. For example, the HOA or COA is usually permitted to include the following:
- late charges
- interest, and
- reasonable attorney fees and costs.
To find out the which charges an HOA or COA in Arkansas may include in its lien, check the association’s governing documents.
Lien priority determines what happens to other liens, mortgages, and lines of credit if your HOA or COA lien is foreclosed. (To learn more about lien priority and its importance in HOA foreclosures, see What happens to my mortgages if the HOA forecloses on its lien?)
HOA and COA liens are often prior to all other liens except:
- property tax liens, and
- a first mortgage or deed of trust. (Learn more about the difference between mortgages and deeds of trust.)
To find out the priority of an HOA or COA lien in Arkansas, check the association’s governing documents.
HOA and COA Foreclosures in Arkansas
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 Arkansas, an HOA or COA may foreclose if you don’t pay the assessments. To learn more about a particular association’s foreclosure rights, read its governing documents. (Learn more about general foreclosure laws and procedures in Arkansas.)
What to Do if You Are Facing Foreclosure by an HOA or COA in Arkansas
If you are facing an HOA or COA foreclosure, you should consult with an attorney licensed in Arkansas 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.)