If you live in a common interest community (such as a house, condo, or townhome) in Delaware, you are most likely responsible for paying dues and assessments to the homeowners’ association (HOA). If you don’t pay, in most cases the HOA can get a lien on your property that could lead to a foreclosure.
Read on to learn about the particular requirements for HOA foreclosures in Delaware.
The Delaware Uniform Common Interest Ownership Act (Del. Code Ann. tit. 25 § 81-101 through § 81-421) governs common interest communities (including planned unit development communities, cooperates, and condominiums) created after September 30, 2009, as well as communities created prior to this date with respect to events and circumstances occurring after that date.
Almost all HOAs 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. In Delaware, the recording of the instruments that create a common interest community, such as the Declaration of Covenants, Conditions, and Restrictions (often called CC&Rs or the declaration) constitutes record notice and perfection of the lien. No further recording of the claim of lien for assessments is required (Del. Code Ann. tit. 25 § 81-316(d)). (In some states, the association must record the lien.)
Delaware law sets out the types of charges that the HOA may include in the assessments lien (Del. Code Ann. tit. 25 § 81-316(a)). Unless the declaration provides otherwise, the association can include charges for:
An HOA’s lien is prior to all other liens, except for:
Under certain circumstances, an HOA lien for delinquent assessments may have priority over a lender’s mortgage. This is called a super lien. In Delaware, six months worth of delinquent common expense assessments have super lien status over both a first and second mortgage so long as the lien is recorded (Del. Code Ann. tit. 25 § 81-316(b)). (Learn more in Nolo’s article Homeowners’ Association Super Liens.)
The HOA must provide you with a statement of the assessments due within ten business days if you make a request in writing (Del. Code Ann. tit. 25 § 81-316(h)).
If you default on the assessments, the HOA 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 Delaware, the HOA may foreclose on its lien in the same manner as a mortgage lender can foreclose on a mortgage (Del. Code Ann. tit. 25 § 81-316(j)(1)). Since mortgages in Delaware are foreclosed judicially, this means that the HOA will file a lawsuit in court to foreclose its lien. (Learn more about foreclosure laws and procedures in Delaware.)
Delaware law limits the HOA’s ability to foreclosure in certain circumstances.
The HOA cannot foreclose unless the owner:
Fines, in contrast to assessments, are the penalties that an HOA imposes if you violate the CC&R's or other governing documents. For example, letting your lawn become overgrown, leaving trash cans outside, and parking in forbidden areas can result in fines and associated fees.
In Delaware, a foreclosure action cannot be started if the only amounts due are for fines (and related sums) unless the HOA first obtains a judgment in a lawsuit against the owner (Del. Code Ann. tit. 25 § 81-316(m).
In order for the lien to remain valid, the HOA must initiate an action to enforce the lien within three years from the date that the full amount of the assessments became due (Del. Code Ann. tit. 25 § 81-316(e)). This is called the statute of limitations.
If you are facing an HOA foreclosure, you should consult with an attorney licensed in Delaware 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.)