Vermont HOA and COA Foreclosures
If you default on HOA or COA dues and assessments in Vermont, the association can foreclosure on your condo, townhome, or house.
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 HOA Lien Laws
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:
- common interest developments, including condominiums and other planned communities, created after January 1, 1999 (with limited exceptions)
- common interest communities created before January 1, 1999 with respect to certain events and circumstances that occur after this date, and
- certain pre-existing communities that opt in to these laws.
How HOA Liens Work
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.)
Charges the HOA May Include in the Lien in Vermont
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:
- late charges
- other fees or charges, and
- reasonable attorney’s fees and costs (Vt. Stat. Ann. tit. 27A, § 3-116(a)).
HOA Lien Priority in Vermont
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:
- liens and encumbrances recorded before the declaration
- liens for real estate taxes (and other governmental assessments), and
- a first mortgage or deed of trust recorded before the date on which the assessment to be enforced became delinquent (Vt. Stat. Ann. tit. 27A, § 3-116(b)).
HOA Super Liens
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.)
You Can Request a Statement of Past-Due Assessments
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)).
HOA Foreclosures in Vermont
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:
- owes at least three months of common expense assessments
- has failed to accept or comply with a payment plan offered by the HOA, and
- the HOA board expressly votes to begin the foreclosure action (Vt. Stat. Ann. tit. 27A, § 3-116(m)).
HOA Must Obtain Judgment First if Lien is for Charges Other than Assessments
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.
Statute of Limitations
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.
What to Do if You Are Facing Foreclosure by an HOA in Vermont
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.)