Louisiana HOA and COA Foreclosures

If your home is part of a condominium owners' association (COA) or homeowners' association (HOA) in Louisiana and you fall behind in assessments:

• The COA or HOA can usually get a lien on your home if you become delinquent in paying the assessments.
• After you default on the assessments, the COA or HOA may foreclose.
• Lien priority determines what happens to other liens, like a mortgage, if a COA or HOA lien is foreclosed.

If the COA or HOA initiates a foreclosure, you might have a defense to the action, such as the association charged you too much, imposed unreasonable fees, or failed to follow state laws.

Or you might be able to negotiate a way to get caught up on the overdue amounts and save your home. For example, you might be able to pay off the entire delinquency, negotiate a reduced payoff amount, or enter into a repayment plan.

How COA and HOA Assessments Generally Work

When you buy a single-family home, townhome, or condominium that's part of a planned community with covenants, you'll most likely pay fees and assessments, often collectively called "assessments," to a COA or HOA. If you fall behind in the assessments, the association will likely initially try to collect the debt using traditional methods. For instance, the association will probably call you and send letters.

But if those tactics don't get you to pay up, the association might try other ways to collect from you. The association might take away your privileges to use the common facilities or file a lawsuit for a money judgment against you.

Based on the association's Declaration of Covenants, Conditions, and Restrictions (CC&Rs) or Declaration of Condominium and state law, most HOAs and COAs also have the power to get a lien on your property if you become delinquent in assessments. Once you fall behind in payments, a lien will usually automatically attach to your property. Sometimes, the association will record its lien with the county recorder to provide public notice that the lien exists, regardless of whether state law requires recording.

An assessments lien clouds the title to the property, hindering your ability to sell or refinance the home. In addition, the property can also be foreclosed to force a sale to a new owner—even if the property has a mortgage.

COA and HOA Liens in Louisiana

In Louisiana, a COA or HOA has what's called a "privilege" (an assessments lien) if the owner fails to pay the assessments. To be preserved, the COA or HOA must record a "claim of privilege" in the mortgage records in the parish where the property is located. (La. Rev. Stat. Ann. § 9:1123.115(A)(2), § 9:1146).

Charges a COA and HOA May Include in a Lien

A COA or HOA in Louisiana is generally permitted to include the following charges in its lien:

• unpaid assessments
• any fines or late fees in excess of $250 (COAs)
• reasonable attorneys' fees, and
• interest. (La. Rev. Stat. Ann. § 9:1123.115(A)(1), § 9:1145).

Further, if a condo unit owner fails to timely pay the assessments for a period of three months or more during any eight-month period—and the COA provides notice to the owner as legally required—the COA may accelerate one year of condo fees in advance and file a privilege for this amount. (La. Rev. Stat. Ann. § 9:1123.115(A)).

Notice of a COA or HOA Lien in Louisiana

A COA must provide seven days' notice to the owner before filing the claim of privilege. Notice must be by personal service, or registered or certified mail, and include the date the assessment became delinquent or accelerated. (La. Rev. Stat. Ann. § 9:1123.115(A)(3)).

An HOA must serve the delinquent owner with a sworn detailed statement of the claim by certified mail, registered mail, or personal delivery at the same time the lien is filed. (La. Rev. Stat. Ann. § 9:1146). Before filing the lien, the association must deliver a written demand for past due charges, expenses, or dues owed to the association to the owner by certified or registered mail, by commercial courier, or at the address and method on file with the association. The lot owner gets 30 days after delivery of the written demand to deliver payment for the amount owed to the association. After the 30 days expire, the association may file its sworn statement, creating the privilege. (La. Rev. Stat. Ann. § 9:1145).

COA and HOA Lien Foreclosures in Louisiana

Once a COA or HOA has a lien, it may foreclose.

Statute of Limitations for COA and HOA Liens

A COA privilege is extinguished if a notice of filing a lawsuit is not recorded within five years after recording the privilege. (La. Rev. Stat. Ann. § 9:1123.115(B)).

An HOA must initiate an action to enforce the lien within five years after recording the privilege. (La. Rev. Stat. Ann. § 9:1147).

COA and HOA Liens and Your Mortgage

A common misconception is that the association can't foreclose if you're current with your mortgage payments. But an association's right to foreclose isn't dependent on whether you're up to date on your mortgage. Instead, lien priority determines what happens in a foreclosure.

What Is Lien Priority?

The priority of liens establishes who gets paid first following a foreclosure sale and often determines whether a lienholder will get paid at all. Liens generally follow the "first in time, first in right" rule, which says that whichever lien is recorded first in the land records has higher priority than later recorded liens. A first lien has a higher priority than other liens and gets the first crack at the foreclosure sale proceeds.

If any proceeds are left after the first lien is paid in full, the excess proceeds go to the second lienholder until that lien is paid off, and so on. A lien with a low priority might get nothing from a foreclosure sale.

But state law or an association's governing documents can adjust lien priority.

COA and HOA Lien Priority in Louisiana

A COA's assessments lien is prior to all other liens and encumbrances, except for:

• privileges, mortgages, and encumbrances recorded before the recordation of the declaration
• privileges, mortgages, and encumbrances on the unit recorded before the recordation of the assessments lien
• property taxes, and
• governmental assessments in which the unit is specifically described. (La. Rev. Stat. Ann. § 9:1123.115(C)).

HOA liens in Louisiana are prioritized based on the date of recordation. (La. Rev. Stat. Ann. § 9:1148). So, an association lien will likely be junior in priority to a first mortgage.

Talk to a Lawyer If You're Facing a COA or HOA Lien Foreclosure

If you're facing an HOA or COA foreclosure in Louisiana, consider consulting with a foreclosure attorney to discuss all legal options available in your circumstances.