If you live in a condominium, single-family house, or townhome that is part of a common interest community in Montana, you are most likely responsible for paying dues and assessments to a condominium association (COA) or homeowners’ association (HOA). If you don’t pay, the COA or HOA can usually get a lien on your property that could lead to a foreclosure.
Read on to learn more about COA and HOA foreclosures in Montana.
Montana COA Laws
Montana’s Unit Ownership Act (Mont. Code Ann. §§ 70-23-101 through 70-23-902) governs COAs.
Montana HOA Laws
Since HOAs in Montana are often incorporated as nonprofit corporations, they are subject to the Nonprofit Corporation Act, which can be found in Chapter 2 of Title 35 of the state statutes.
HOAs are also controlled by their governing documents, which include the Declaration of Covenants, Conditions, and Restrictions (CC&Rs) and bylaws. The specific rules regarding assessments liens can typically be found in these governing documents. (You should have received copies of the CC&Rs and bylaws when you purchased your property. 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
A COA or HOA typically 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). Generally, once a homeowner becomes delinquent on the assessments, a lien will automatically attach to that homeowner's property.
In Montana, a COA must record its claim of lien in the county records (Mont. Code Ann. §70-23-607(2)). If you are part of an HOA, check the CC&Rs to learn about the association’s right to place a lien on your home if you don’t pay the assessments.
Charges the COA or HOA May Include in the Lien
Typically, a COA or HOA’s governing documents will describe any amounts that may be included in the lien. For example, the association is often permitted to include the following charges:
- past-due assessments
- late charges
- interest, and
- reasonable attorney’s fees and costs.
Lien priority determines what happens to other liens, mortgages, and lines of credit if your COA or HOA lien is foreclosed. (To learn more about lien priority and its importance in HOA foreclosures, see What happens to my mortgages if the HOA forecloses on its lien?)
In Montana, a COA lien is prior to all other liens, except for:
- tax liens, and
- a recorded first mortgage or trust indenture (Mont. Code Ann. §70-23-607(1)).
To find out the priority of an HOA lien, check the association’s governing documents.
COA and HOA Foreclosures in Montana
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 Montana, a COA lien may be foreclosed in the same manner as a construction lien, which means the COA must file a lawsuit (Mont. Code Ann. §70-23-608(1)). Alternatively, the COA could sue you for the unpaid common expenses without foreclosing or waiving the lien (Mont. Code Ann. §70-23-608(2)).
To find out about an HOA’s right to foreclose if you become delinquent in paying the assessments, read the association’s governing documents.
What to Do if You Are Facing Foreclosure by an COA or HOA in Montana
If you are facing a COA or HOA foreclosure, you should consult with an attorney licensed in Montana 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.)