I'm behind in HOA dues but not my mortgage. Can the HOA foreclose?

Question

I own a house in a development with a homeowners' association (HOA). I've kept up with my mortgage payments but not on my monthly HOA dues. Can the HOA foreclose?

Answer

Probably yes. Any creditor with a lien on your home has the legal right to foreclose. So, if the HOA has a lien on your property, it may decide to initiate a foreclosure even if you're current on your mortgage payments.

HOA Lien Foreclosures

An HOA can foreclose its lien if state law and the community's Covenants, Conditions, and Restrictions (CC&Rs) allow it to do so, which they typically do.

The foreclosure will be judicial or nonjudicial, depending on the law in your state and the circumstances. The HOA will file a lawsuit against you in state court to start a judicial foreclosure. For a nonjudicial foreclosure, the lender must follow specific procedures set out by state law.

The CC&Rs might also contain specific requirements for foreclosing an HOA lien.

First Mortgages Usually Survive an HOA Foreclosure

HOA liens are often junior in priority to a first mortgage. CC&Rs typically contain a provision that makes an HOA lien subordinate to any first mortgage, even if the HOA lien is a prior lien.

Reasons Why the HOA Might Want to Foreclose Subject to a Mortgage

The HOA doesn't have to consider that you're current on your mortgage payments when it decides whether to start a foreclosure. Sometimes, beginning a foreclosure is an HOA tactic to get you to pay your HOA dues. If you're current on your mortgage payments, losing your home to an HOA foreclosure would be pretty unwise.

The HOA might begin a foreclosure in other cases because its lien has super-lien status. Some states give HOA liens priority over a first mortgage for a specific number of months worth of delinquent assessments.

Foreclosing an HOA super lien might, depending on state law, eliminate the mortgage. For this reason, the mortgage lender usually pays off a super-lien amount to stop a foreclosure and keep the mortgage lien in place. So, if you live in a super-lien state, the HOA might initiate a foreclosure because it knows that if you don't pay, the first-mortgage lender probably will.

Ultimately, if you're current on your mortgage but behind in your HOA dues, and your goal is to keep your home, you should pay the HOA dues, or else you might lose your property to a foreclosure.

How to Avoid an HOA Foreclosure

If your HOA is foreclosing due to unpaid fees, you might be able to stop the process. You could, for example, pay off the full amount you owe or settle the debt for a lesser amount.

Talk to a Lawyer

If you're behind in your HOA fees, consider contacting the HOA to arrange a payment agreement or another workout option before it initiates a foreclosure against you.

Consider talking to a lawyer if you need help negotiating with your HOA or if the HOA has already started a foreclosure. A lawyer can tell you about potential defenses to the foreclosure.