New Jersey HOA and COA Foreclosures
If you default on HOA or COA dues and assessments in New Jersey, the association can foreclosure on your condo, townhome, or house.
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If you live in a condominium, single-family house, or townhome that is part of a common interest development in New Jersey, 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 New Jersey.
New Jersey COA and HOA Lien Laws
The New Jersey Condominium Act (N.J. Stat. Ann. § 46:8B-1 et seq.) governs condominiums and the Planned Real Estate Development Full Disclosure Act (N.J. Stat. Ann. § 45:22A-21 et seq.) governs HOAs.
The rules regarding the operation of the COA or HOA, including those regarding assessments liens, can be found in the association’s governing documents, such as the bylaws or Declaration of Covenants, Conditions, and Restrictions (CC&Rs). (Find out more about what's in the 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 New Jersey, a COA lien becomes effective once the association records a claim of lien in the county records (N.J. Stat. Ann. § 46:8B-21(a)). To find out when an HOA lien becomes effective, 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. If authorized by the association’s governing documents, a COA is permitted to include the following in its lien:
- past-due assessments
- late fees (though the association cannot record a lien that consists solely of late fees)
- reasonable attorney’s fees, and
- interest at a rate established by the association, but no more than the legal rate (N.J. Stat. Ann. § 46:8B-17, § 46:8B-21(a)).
To find out which charges a New Jersey 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 for property taxes
- any lien recorded before the HOA or COA lien is recorded, and
- any mortgage lien (N.J. Stat. Ann. § 46:8B-21(a)).
To find out about 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?)
COA Super Liens
Under certain circumstances, a COA lien for delinquent assessments may have priority over a lender’s mortgage or deed of trust. This is called a super lien.
In New Jersey, six months worth of delinquent assessments (not including late charges, penalties, interest, or collection fees or costs) have super lien status. However, the COA is not entitled to a super lien if the mortgage lender has started a foreclosure action (N.J. Stat. Ann. § 46:8B-21(b)(1)). (Learn more in Nolo’s article Homeowners’ Association Super Liens.)
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 days after it receives your request (N.J. Stat. Ann. § 46:8B-21(d)).
COA and HOA Foreclosures in New Jersey
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 New Jersey, a COA may foreclose its lien in the same manner as a mortgage on real estate (N.J. Stat. Ann. § 45:8B-21(f)). This means the COA must file a lawsuit to foreclose. (Learn more about general foreclosure laws and procedures in New Jersey.)
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.
What to Do if You Are Facing Foreclosure by a COA or HOA in New Jersey
If you are facing a COA or HOA foreclosure, you should consult with an attorney licensed in New Jersey 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.)