Kentucky HOA and COA Foreclosures
If you default on HOA or COA dues and assessments in Kentucky, the association can foreclosure on your condo, townhome, or house.
If you live in a condominium, single-family house, or townhome that is part of a common interest development in Kentucky, 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 Kentucky.
Kentucky COA Lien Laws
The Kentucky Condominium Act (Ky. Rev. Stat. Ann. §§ 381.9101 through 381.9207) applies to all condominiums created after January 1, 2011, and its provisions also apply to condominiums previously created as far as events or circumstances occurring after this date.
Kentucky HOA Lien Laws
HOAs in Kentucky are often incorporated as nonprofit corporations and are subject to the state statutes that govern such corporations. (The Kentucky Nonprofit Corporation Act can be found at § 273.161 et seq. of the state statutes.)
The 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 Nolo’s article 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”). In Kentucky, once you fall behind on the assessments, a COA lien will automatically attach to your home from the time that the assessment came due. If the assessment is payable in installments, the lien is for the full amount of the assessment at the time the first installment becomes due (Ky. Rev. Stat. Ann. § 381.9193(1)).
Some states require that the lien be recorded in the county where the property is located. However, in Kentucky, the recording of the declaration constitutes record notice of the existence of the COA lien, and no further recordation for any claim of lien is required (Ky. Rev. Stat. Ann. § 381.9193(4)). (To find out when an HOA lien attaches to the property, check the association’s governing documents.)
Charges the COA or HOA May Include in the Lien
State law and the COA or HOA’s governing documents will usually set out the type of charges that may be included in the lien (Ky. Rev. Stat. Ann. § 381.9167(1)(k), § 381.9193(1)). Unless the declaration provides otherwise, in Kentucky, a COA is permitted to include the following in its lien:
- past-due assessments
- late charges
- reasonable fines for violations of the declaration, bylaws, rules, and regulations (after giving the owner notice and an opportunity to be heard)
- reasonable collection costs
- reasonable attorney’s fees and costs
- certain fees (for example, for the preparation and recordation of amendments to the declaration or statements of unpaid assessments), and
- interest at a rate established by the association, not to exceed 18% (Ky. Rev. Stat. Ann. § 381.9191(2)).
To find out which charges a Kentucky HOA may include in its lien, check the association's governing documents.
A COA’s lien is prior to all other liens, except for:
- liens and encumbrances recorded before the declaration is recorded
- liens for real estate taxes and other governmental assessments, and
- a mortgage recorded before the date on which the assessment sought to be enforced became delinquent (Ky. Rev. Stat. Ann. § 381.9193(2)).
To find out the priority of an HOA lien, check the association’s governing documents. (Learn what lien priority is and what happens to a first mortgage in an HOA foreclosure in What happens to my mortgages if the HOA forecloses on its lien?)
Requesting a Statement of Assessments Due from a COA
If you make a written request, the COA must provide you with a statement setting forth the amount of the unpaid assessments within ten business days after it receives your request (Ky. Rev. Stat. Ann. § 381.9193(8)).
COA and HOA Foreclosures in Kentucky
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.)
In Kentucky, a COA may foreclose its lien in the same manner as a mortgage on real estate (Ky. Rev. Stat. Ann. § 381.9193(1)). (Learn more about general foreclosure laws and procedures in Kentucky.)
An HOA’s foreclosure rights come from the governing documents of the association. To find out the specific notice and foreclosure procedures that the HOA must follow if you fall behind in payments, read the association’s governing documents.
Statute of Limitations for COA Liens
A COA lien for unpaid assessments is extinguished unless the COA initiates an action to enforce the lien within five years after the full amount of the assessments becomes due (Ky. Rev. Stat. Ann. § 381.9193(5)). (This is called the statute of limitations.)
What to Do if You Are Facing Foreclosure by a COA or HOA in Kentucky
If you are facing a COA or HOA foreclosure, you should consult with an attorney licensed in Kentucky 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.)