If you live in a house, condo, or townhome that is part of a common interest community in Indiana, 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 Indiana.
Indiana HOA and COA Lien Laws
Title 32 (“Property”), Article 25 (“Condominiums”) of the Indiana Code governs COAs, while the statutes pertaining to HOAs are found in Title 32 (“Property”), Article 28 (“Liens on Real Property”), Chapter 14 (“Homeowners Association Liens”).
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”).
In Indiana, an HOA lien attaches to the real estate when the association records a notice of lien in the county recorder’s office (Ind. Code § 32-28-14-6(a)). Unpaid COA assessments, on the other hand, become a lien at the time of the assessment (Ind. Code § 32-25-6-3(a)).
Lien Priority in Indiana
The priority of an HOA lien is established on the date a notice of the lien is recorded (Ind. Code § 32-28-14-5(b)), whereas a COA lien in Indiana has priority over all other liens except:
- tax liens on the condominium unit in favor of any assessing unit or special district, and
- all sums unpaid on a first mortgage of record (Ind. Code § 32-25-6-3(a)).
(Learn more about lien priority and what happens to mortgages in an association foreclosure in What happens to my mortgages if the HOA forecloses on its lien?)
Charges the HOA or COA May Include in the Lien
All unpaid sums assessed by an HOA for common expenses constitute a lien on the property (Ind. Code § 32-28-14-5(a)).
The Indiana statutes do not specify which charges may be included in a COA lien. (It should be noted that a condominium unit owner must pay a reasonable rental for the unit during a foreclosure (if provided in the bylaws). (Ind. Code § 32-25-6-3(b)).
HOA and COA Foreclosures in Indiana
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.)
An HOA may foreclose its lien by filing a complaint (lawsuit). (Ind. Code § 32-28-14-8(a).)
The HOA must normally wait 90 days after recording the lien to file the lawsuit. However, it can file the lawsuit sooner in either of the below situations.
- Someone else files a foreclosure action on the property.
- Someone files written notice telling the HOA to foreclose on its lien. (Ind. Code § 32-28-14-8(a)(1)). (See “Voiding an HOA Lien for Failure to Foreclosure,” below, for reasons why the homeowner or another entity would file such a notice.)
Voiding an HOA Lien for Failure to Foreclose
An HOA lien is void if both of the following events occur.
- The homeowner (or anyone with an interest in the property, such as a mortgagee or a lienholder) provides written notice to the lien owner or lienholder telling it to initiate an action to foreclose the lien.
- The HOA doesn’t file an action to foreclose the lien within one year after receiving the notice described above.
Although it sounds counterintuitive, a homeowner (or another party with an interest in the property) might want to file such a notice in order to shorten the time period in which the HOA can foreclose. If the homeowner files this notice, and the HOA doesn’t foreclose within a year, then the lien is void. This effectively reduces the statute of limitations (the time period in which the HOA can foreclosure ) from five years to one year.
However, even if the lien is voided, this does not prevent the HOA from collecting amounts due in another manner allowed by law (Ind. Code § 32-28-14-9(a)). For example, it could sue you for the money owed.
Statute of Limitations for HOA Liens
After the lien is recorded, the HOA has five years to bring a foreclosure lawsuit. After that time, it cannot foreclose on the lien. (Ind. Code § 32-28-14-8(a)(2)). This is called the statute of limitations.
To foreclose a COA lien in Indiana, the association must record the lien. It may then foreclose the lien by bringing a lawsuit. (Ind. Code § 32-25-6-3(b)).
What to Do if You Are Facing Foreclosure In Indiana by an HOA or COA
If you are facing an HOA or COA foreclosure, you should consult with an attorney licensed in Indiana 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.)