Maryland HOA and COA Foreclosures
If you default on HOA or COA dues and assessments in Maryland, the association can foreclosure on your condo, townhome, or house.
If you live in a private community (whether it is a condo, townhouse, or single-family home) in Maryland, 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 Maryland.
HOA and COA Laws in Maryland
In Maryland, the Maryland Homeowners Association Act (Md. Code Ann., Real Prop. §§ 11B-101 through 11B-118) governs HOA activities in the state, while the Maryland Condominium Act (Md. Code Ann., Real Prop. §§ 11-101 through 11-143) governs COAs. The Maryland Contract Lien Act (Md. Code Ann., Real Prop. §§ 14-201 through 14-206) governs the enforcement and foreclosure of HOA and COA assessments liens.
How HOA and COA Liens Work
Almost all HOAs and COAs have the power to place a lien on the property if the homeowner becomes delinquent in paying the monthly dues and/or any special assessments (collectively referred to as “assessments”). Once a homeowner becomes delinquent on the assessments, a lien will usually automatically attach to that homeowner's property.
Charges the HOA or COA May Include in the Lien
Maryland law specifies the types of charges that a COA may include in an assessments lien.
- Assessments. The COA can include amounts for unpaid assessments in the lien (Md. Code Ann., Real Prop. § 11-110(d)).
- Late charges. After 15 calendar days, COAs in Maryland may assess a late charge of $15 or 1/10 of the total amount of any delinquent assessment or installment, whichever is greater, if permitted by the COA bylaws (Md. Code Ann., Real Prop. § 11-110(e)).
- Attorney’s fees and collection costs. COAs may also include reasonable attorney's fees and collection costs in the total lien amount (Md. Code Ann., Real Prop. § 11-110(d)).
- Interest. A COA may charge interest at the rate of 18%, unless the governing documents specify a lower rate (Md. Code Ann., Real Prop. § 11-110(e)).
To find out which charges an HOA in Maryland may include in its lien, check the association's governing documents, such as the Declaration of Covenants, Conditions, and Restrictions (CC&Rs).
HOA and COA Super Liens
In most cases, first mortgages or deeds of trust have priority over an HOA or COA lien. However, under certain circumstances, an HOA or COA lien for delinquent assessments may have priority over a lender’s first mortgage or deed of trust. This is called a super lien. (Learn more about lien priority and what happens to a first mortgage in an association foreclosure in Nolo’s article What happens to my mortgages if the HOA forecloses on its lien?)
Maryland law states that if a mortgage or deed of trust holder forecloses, four months worth of unpaid regular HOA or COA assessments for common expenses (not including interest, collection costs, late charges, fines, attorney’s fees, special assessments, or any other costs) or $1,200, whichever is less, get priority over a first mortgage or deed of trust recorded on or after October 1, 2011 (Md. Code Ann., Real Prop. § 11B-117(c), 11-110(f)). (Learn more in Nolo’s article Homeowners’ Association Super Liens.)
HOA and COA Foreclosures in Maryland
In Maryland, an HOA or COA may foreclose an assessments lien by a nonjudicial or judicial foreclosure process, in the same manner that a deed of trust or mortgage is foreclosed (Md. Code Ann., Real Prop. § 14-204(a)). (Learn more about HOA liens and foreclosure, as well as the difference between mortgages and deeds of trust and foreclosure laws and procedures in Maryland.)
While late charges and various other charges imposed by an HOA or COA generally constitute a lien on your property, an association may only foreclose a lien that consists solely of:
- delinquent periodic assessments or special assessments, and
- reasonable costs and attorney's fees directly related to the filing of the lien (but not in an amount more than the amount of the delinquent assessments) (Md. Code Ann., Real Prop. § 14-204(d)(2)).
(The HOA or COA can use other means to enforce a lien for additional amounts, such as by suing you for the money owed.)
Statute of Limitations
Any action to foreclose a lien must be started within 12 years after the date a statement of lien is recorded (Md. Code Ann., Real Prop. § 14-204(c)). This is called the statute of limitations.
What to Do if You Are Facing Foreclosure in Maryland by an HOA or COA
If you are facing an HOA or COA foreclosure, you should consult with an attorney licensed in Maryland 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.)