If you live in a common interest community (such as a single-family house, condominium, or townhome) in Vermont, you are probably responsible for paying dues and assessments to a homeowners’ association (HOA). If you fall behind in payments, in most cases the HOA can get a lien on your property that could lead to a foreclosure.
Read on to learn about the particular requirements for HOA foreclosures in Vermont.
Vermont’s Uniform Common Interest Ownership Act (Vt. Stat. Ann. tit. 27A, § § 1-101 through 4-120) is the main set of laws governing HOAs in the state. It applies to:
Almost all HOAs have the power to place a lien on the property if the homeowner beco
mes 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.
In Vermont, the recording of the HOA documents that create the common interest community (such as a Declaration of Covenants, Conditions, and Restrictions) constitutes record notice and perfection of the lien. No further recording of any claim or lien for assessments is required (Vt. Stat. Ann. tit. 27A, § 3-116(e)). (In some states, the association must record the lien.) (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.)
Vermont law sets out the types of charges that the HOA may include in its assessments lien. Unless the declaration provides otherwise, the association can include charges for:
Lien priority determines what happens to other liens, mortgages, and lines of credit if your HOA or COA 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 Vermont, an HOA’s lien is prior to all other liens, except for:
Under certain circumstances, an HOA lien for delinquent assessments may have priority over a lender’s first mortgage or deed of trust. This is called a super lien. In Vermont, six months worth of delinquent common expense assessments have super lien status (Vt. Stat. Ann. tit. 27A, § 3-116(c)). (Learn more in Nolo’s article Homeowners’ Association Super Liens.)
If you make a written request to the HOA, the association must provide you with a statement of the amount of unpaid assessments within ten business days after receiving the request (Vt. Stat. Ann. tit. 27A, § 3-116(i)).
If you default on the assessments, a Vermont HOA can foreclose on your home (Vt. Stat. Ann. tit. 27A, § 3-116(j)). 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.)
Vermont law limits the HOA’s ability to foreclosure in certain circumstances. For example, the HOA cannot start a foreclosure unless the owner:
Also, an HOA cannot start a foreclosure action if the amount due consists only of charges other than assessments (such as fines) unless the HOA first obtains a judgment in a lawsuit against the owner and perfects a judgment lien (Vt. Stat. Ann. tit. 27A, § 3-116(o)).
Fines, in contrast to assessments, are the penalties that an HOA imposes if you violate the CC&R's or other governing documents. For example, letting your lawn become overgrown, leaving trash cans outside, and parking in forbidden areas can result in fines.
The HOA must start the foreclosure within three years after the full amount of the assessment becomes due, otherwise the lien is extinguished (wiped ou) (Vt. Stat. Ann. tit. 27A, § 3-116(f)). This is called the statute of limitations.
If you are facing an HOA foreclosure, you should consult with an attorney licensed in Vermont 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.)