Illinois HOA and COA Foreclosures
If you default on HOA or COA dues and assessments in Illinois, the homeowners association can foreclosure on your condo, townhome, or house.
If you live in a condominium, single-family home, or townhome that is part of a common interest community in Illinois, you are most likely responsible for paying dues and assessments to a condominium association (COA) or homeowners’ association (HOA). If you don’t pay, the COA or HOA is usually entitled to get a lien on your property that could lead to a foreclosure. The COA or HOA may also choose to evict you instead, and rent out your home to a tenant for a certain period of time.
Read on to learn more about COA and HOA foreclosures in Illinois.
Illinois COA Lien Laws
The Illinois Condominium Property Act (765 Ill. Comp. Stat. 605/1 through 605/32) governs COAs.
Illinois HOA Lien Laws
The Illinois Common Interest Community Association Act (765 Ill. Comp. Stat. 160/1-1 through 160/1-80) governs HOAs, though it is not very comprehensive compared to the Condominium Property Act.
An HOA’s governing documents, which include the Declaration of Covenants, Conditions, and Restrictions (CC&Rs) and bylaws, will typically contain specific information regarding HOA assessments liens. (You should have received copies of the CC&Rs and bylaws when you purchased your property. Find out more about what's in your association’s CC&Rs and other relevant documents in Nolo’s article Before Buying: How to Read the CC&Rs or Homeowners' Association (HOA) Documents.)
How COA and HOA Liens Work
A COA or HOA typically has the power to place a lien on your property if you get behind in monthly dues and/or any special assessments (collectively referred to as assessments) for the repair and maintenance of common areas. Generally, once a homeowner defaults on the assessments, a lien will automatically attach to that homeowner's property.
In Illinois, a COA is entitled to a lien if the condo owner fails or refuses to pay the common expenses or fines (765 Ill. Comp. Stat. 605/9(g)(1)).
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 COA or HOA May Include in the Lien
State law, as well as the COA or HOA’s CC&Rs and bylaws, will generally set out the type of charges that may be included in the lien. In Illinois, a COA is permitted to include the following in its lien:
- past due assessments
- late charges
- reasonable attorney's fees
- costs of collection
- fines, and
- interest (765 Ill. Comp. Stat. 605/9(g)(1)).
To find out which charges an Illinois HOA 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 COA or HOA 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?)
In Illinois, a COA lien is prior to all other liens, except for:
- taxes and liens by certain governmental entities, and
- encumbrances recorded before the date of the condo owner’s failure or refusal to pay the assessments or fines (765 Ill. Comp. Stat. 605/9(g)(1)).
HOA CC&Rs will usually include a provision regarding lien priority, and often provide that HOA assessments and liens are subordinate to a first mortgage. To find out the priority of an HOA lien in Illinois, check your CC&Rs and bylaws.
COA and HOA Foreclosures in Illinois
If you default on the assessments, the COA or 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.)
A COA lien may be foreclosed in the same manner as a mortgage once the association records the lien in the county records (765 Ill. Comp. Stat. 605/9(h)). (Learn more about general foreclosure laws and procedures in Illinois.)
To find out about an HOA’s right to foreclose if you become delinquent in paying the assessments, read your association’s governing documents.
COA Could Evict You Instead of Foreclosing
Alternatively, a COA may choose to evict you rather than foreclosing (765 Ill. Comp. Stat. 605/9.2). (An eviction lawsuit is called a “forcible entry and detainer” action in Illinois.)
Whereas a foreclosure actually transfers ownership of the property to the association, the eviction only transfers the right of possession. The COA can then rent out your condo to collect the past due assessments, as well as cover current assessments.
Where to Find Illinois’ COA Forcible Entry and Detainer Law
The Illinois Code of Civil Procedure (735 Ill. Comp. Stat. 5/Art. IX), as well as the association’s declaration and the Illinois Condominium Property Act (if the association is subject to this Act), all provide that a COA can evict a nonpaying owner.
The COA must give 30 days notice setting forth the total amount due before filing a forcible entry and detainer action (735 Ill. Comp. Stat. 5/9-104.1(a)).
If you don’t pay, the COA will file a lawsuit to obtain possession and a judgment for the delinquent assessments plus legal fees and costs, and will then evict you from the condo. If you make a partial payment this will not postpone the eviction or invalidate the demand if, at the end of the 30 days, the payments do not add up to the total amount demanded in the notice. (735 Ill. Comp. Stat. 5/9-104.1(b)).
After winning the lawsuit, the COA may lease the property to a tenant for up to 13 months, which may be extended by a court order if you are still behind in payments at the end of the lease term (735 Ill. Comp. Stat. 5/9-111.1).
The COA is entitled to possession of the property until the property owner pays all current and back assessments, as well as costs and attorney’s fees associated with the forcible entry and detainer action (735 Ill. Comp. Stat. 5/9-111(a)).
How to Get the Condo Back
Once the homeowner has paid all outstanding assessments, attorney fees, and court costs, he or she may regain possession of the condo at the end of the lease term by filing a motion with the court to vacate the judgment of possession (735 Ill. Comp. Stat. 5/9-111(a)). If the rental income exceeds the amounts due, the condo owner is entitled to that surplus (735 Ill. Comp. Stat. 5/9-111.1).
An HOA may also be able to evict a nonpaying homeowner. To find out more about an HOA’s right to evict you if you become delinquent in paying the assessments, check the association's CC&Rs and bylaws.
What to Do if You Are Facing Foreclosure by a COA or HOA in Illinois
If you are facing a COA or HOA foreclosure, you should consult with an attorney licensed in Illinois 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.)