If you live in a house, condo, or townhome that is part of a common interest community in Hawaii, you are most likely responsible for paying dues and assessments to the 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 Hawaii.
Hawaii HOA and COA Lien Laws
In Hawaii, planned community associations (HOAs) are governed by Haw. Rev. Stat. §§ 421J-1 to 421J-15. Condominiums created after July 1, 2006, are governed by Haw. Rev. Stat. §§ 514A-1 through 514A-135, while those created prior to that date are governed by §§ 514B-1 through 514B-163.
How HOA and COA Liens Work
Most HOAs and COAs have the power to place a lien on your home if you become delinquent in paying the monthly dues and/or any special assessments (collectively referred to as “assessments”). Once you become delinquent on the assessments, a lien will usually automatically attach to your property.
HOA Lien Priority in Hawaii
The priority of an HOA lien in Hawaii is determined by the association documents or, if no priority is provided in the association documents, by the date the lien is recorded (Haw. Rev. Stat. § 421J-10.5(a)).
COA Lien Priority in Hawaii
A COA lien for unpaid assessments has priority over all other liens except:
- liens for taxes and assessments lawfully imposed by governmental authority and
- any mortgage that was recorded prior to the recordation of a notice of a lien by the association (Haw. Rev. Stat. § 514B-146(a)). (Learn more about lien priority and what happens to mortgages in an association foreclosure in Nolo’s article What happens to my mortgages if the HOA forecloses on its lien?)
Charges the HOA or COA May Impose
All unpaid sums assessed by the association are a lien against the unit (Haw. Rev. Stat. § 421J-10.5(a), § 514B-146(a)). This means that the HOA or COA may include certain charges and penalties in the lien, including:
- late fees
- attorneys’ fees and costs
- interest (not exceeding 18% for COAs), and
- fines for violations of the declaration, bylaws, rules, and regulations of the association.
HOA and COA Foreclosures in Hawaii
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 Hawaii, an HOA or COA may foreclose its lien judicially or nonjudicially (Haw. Rev. Stat. § 421J-10.5(a), § 514B-146(a)). (Learn more about judicial v. nonjudicial foreclosures.) HOAs and COAs have their own nonjudicial foreclosure process under state law, which is separate from that of mortgage lenders (Haw. Rev. Stat. § 667-91 et seq.)
HOA/COA Nonjudicial Foreclosure Procedure
In order to conduct a nonjudicial foreclosure of its lien, the association must prepare and record a Notice of Default and Intention to Foreclose, which must be served to the delinquent owner and other parties. The owner then has:
- 30 days after service of the notice to submit a payment plan to the association, or
- 60 days after service of the notice to cure the default (Haw. Rev. Stat. § 667-92).
(Associations must accept “reasonable” payment plans. Basically, a reasonable payment plan consists of payment of the current amounts due plus a payment plan for the delinquent balance that can be completed within 12 months.)
If the parties do not agree on a payment plan and the default is not cured, the association may sell the home at a public sale after publishing notice of the sale and providing notice to the homeowner and other parties. The sale may take place:
- 60 days after the notice of the sale is distributed, or
- 14 days after the final publication of the notice, whichever is later (Haw. Rev. Stat. § 667-95).
Foreclosure Limitation: Nonjudicial Foreclosure Prohibited if Lien Consists Solely of Fines, Penalties, or Fees
An HOA or COA cannot nonjudicially foreclose a lien that arises solely from fines, penalties, legal fees, or late fees. The foreclosure of any such lien must be filed in court (Haw. Rev. Stat. § 421J-10.5(a), § 514B-146(a)).
Statute of Limitations
Proceedings to enforce an HOA or COA lien must begin within six years after the assessment became due (Haw. Rev. Stat. § 421J-10.5(a), § 514B-146(a)). (This is called the statute of limitations.)
If the homeowner files bankruptcy, the statute of limitations is tolled (suspended) until 30 days after the automatic stay is lifted (Haw. Rev. Stat. § 421J-10.5(a), § 514B-146(a)). (Learn more about the automatic stay in Nolo’s article Bankruptcy's Automatic Stay and Foreclosure.)
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 Hawaii 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.)