Tennessee HOA and COA Foreclosures
If you default on HOA or COA dues and assessments in Tennessee, the homeowners association can foreclosure on your condo, townhome, or house.
If you live in a condominium, single-family home, or townhome that is part of a common interest community in Tennessee, 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 is usually entitled to get a lien on your property that could lead to a foreclosure.
Read on to learn more about COA and HOA foreclosures in Tennessee.
Tennessee COA and HOA Lien Laws
The Tennessee Condominium Act of 2008 (Tenn. Code Ann. §§ 66-27-201 through 66-27-507) applies to all condominiums created after January 1, 2009, and the provisions discussed in this article also apply to condos created before this date with regard to events or circumstances that occur after this date.
An HOA’s governing documents, which include the Declaration of Covenants, Conditions, and Restrictions (CC&Rs) and bylaws, will usually contain specific information regarding assessments liens. (You should have received copies of the CC&Rs and bylaws when you purchased your property. Find out more about what's in your association’s 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 get behind in monthly dues and/or any special assessments (collectively referred to as assessments). Generally, once a homeowner defaults on the assessments, a lien will automatically attach to that homeowner's property.
In Tennessee, a COA is entitled to a lien for assessments or fines from the time they became due. If an assessment is payable in installments, the lien amount is equal to the full amount of the assessment from the time the first installment became due (Tenn. Code Ann. § 66-27-415(a)(1)(A)).
The recording of the COA’s governing documents constitutes record notice and perfection of the lien. The COA doesn't have to record the lien for assessments (Tenn. Code Ann. § 66-27-415(d)). (In some states, the association must record the lien.)
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
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. In Tennessee, unless the declaration provides otherwise, 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)
- certain fees (for example, for the preparation and recordation of amendments to the declaration), and
- interest (Tenn. Code Ann. § 66-27-415(a)(1)(D)).
To find out which charges a Tennessee HOA may include in its lien, check the association's governing documents.
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 Tennessee, a COA lien is prior to all other liens, except for:
- liens and encumbrances recorded before the COA records the condo declaration
- real estate tax liens (and other governmental assessments or charges), and
- a first mortgage or deed of trust on the condo that was recorded before the delinquency date of the assessment (Tenn. Code Ann. § 66-27-415(b)).
HOA CC&Rs often address lien priority, and typically state that HOA assessments and liens are subordinate to a first mortgage or deed of trust. To find out the priority of an HOA lien in Tennessee, check your CC&Rs and bylaws.
COA Super Liens
Under certain circumstances, a COA lien for delinquent assessments may have priority over a lender’s first mortgage or deed of trust. This is called a super lien. In Tennessee, six months worth of delinquent common expense assessments have super lien status (Tenn. Code Ann. § 66-27-415(b)(2)). (Learn more in Nolo’s article Homeowners’ Association Super Liens.)
Requesting a Statement of Unpaid Assessments from a COA
If you make a written request to the COA, the association must provide you with a statement of the amount of unpaid assessments within seven days after receiving the request (Tenn. Code Ann. § 66-27-415(h)).
COA and HOA Foreclosures in Tennessee
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 Tennessee, a COA lien may be foreclosed:
- judicially (by filing a lawsuit) or
- nonjudicially (if permitted by the COA’s governing documents and so long as the COA gives proper notice of the foreclosure to the unit owner.) (Tenn. Code Ann. § 66-27-415(a)(1)). (Learn more about judicial v. nonjudicial foreclosures and general foreclosure laws and procedures in Tennessee.)
To find out about an HOA’s right to foreclose if you become delinquent in paying the assessments, read your CC&Rs and bylaws.
Statute of Limitations for COA Liens
A COA must start the foreclosure within six years after the full amount of the assessments becomes due otherwise the lien is extinguished (eliminated) (Tenn. Code Ann. § 66-27-415(e)). This is called the statute of limitations.
What to Do if You Are Facing Foreclosure by a COA or HOA in Tennessee
If you are facing a COA or HOA foreclosure, you should consult with an attorney licensed in Tennessee 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.)