If you live in a private community setting (whether it is a condo, townhouse, or single-family home) in Iowa, you are most likely responsible for paying dues and assessments to a condominium association (COA) or homeowners’ association (HOA). If you fall behind in payments, in most cases the COA or HOA can get a lien on your home that could lead to a foreclosure.
Read on to learn about the particular requirements for COA and HOA foreclosures in Iowa.
Iowa COA and HOA Laws
In Iowa, the activities of COAs are governed by Chapter 499B of the Iowa Code, which is titled “Horizontal Property (Condominiums).”
HOAs in Iowa are typically incorporated as nonprofit corporations and are governed by the state statutes in this area. The specific rules regarding the operation of the HOA, including those regarding assessments liens, can be found in the association’s governing documents, such as the Declaration of Covenants, Conditions, and Restrictions (CC&Rs). (Find out more about what's in your HOA CC&Rs and other relevant documents in Before Buying: How to Read the CC&Rs or Homeowners' Association (HOA) Documents.)
How COA and HOA Liens Work
Generally, a COA or HOA has the power to place a lien on your property 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, usually a lien will automatically attach to your property.
Charges the COA or HOA May Include in the Lien
In Iowa, all unpaid sums assessed by the COA constitute a lien on the unit (Iowa Code § 499B.17). For HOAs, typically the association’s governing documents will describe any charges that may be included in the lien. For example, the HOA is usually permitted to include the following in its lien:
- late charges
- interest, and
- reasonable attorney fees and costs.
COA and HOA Lien Priority
A COA’s lien is prior to all other liens, except for:
- tax liens, and
- all sums unpaid on a first mortgage of record. (Learn about lien priority and what happens to a mortgage in an HOA foreclosure in What happens to my mortgages if the HOA forecloses on its lien?)
To find out the priority of an HOA lien, check the association’s governing documents.
COA and HOA Foreclosures in Iowa
In Iowa, 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 by a lawsuit in the same manner as a mortgage of real property. (Learn more about general foreclosure laws and procedures in Iowa.) Sometimes COA bylaws set forth conditions in which you must pay rent during a COA foreclosure. Iowa law allows such provisions. Check your bylaws carefully. (Iowa Code § 499B.17.)
However, the COA doesn't have to foreclose. Instead, it can file lawsuit to recover a money judgment for unpaid common expenses. If it chooses to file a lawsuit for money damages, it doesn't waive its lien (meaning the lien will still remain on the property until you pay off the amount you owe). (Iowa Code § 499B.17).
To find out about the specific notice and foreclosure procedures that the HOA must follow if you fall behind in assessments, read the association’s governing documents.
What to Do if You Are Facing Foreclosure by a COA or HOA in Iowa
If you are facing a COA or HOA foreclosure, you should consult with an attorney licensed in Iowa 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.)