Wisconsin HOA and COA Foreclosures
If you default on HOA or COA dues and assessments in Wisconsin, the homeowners association can foreclosure on your condo, townhome, or house.
If you own a condominium, single-family home, or townhome that is part of a common interest community in Wisconsin, you probably pay dues and assessments to a condominium association (COA) or homeowners’ association (HOA). If you don’t pay COA or HOA dues, the COA or HOA can get a lien on your property that could lead to a foreclosure of your home.
Read on to learn more about COA and HOA foreclosures in Wisconsin.
Wisconsin COA Lien Laws
In Wisconsin, the Condominium Ownership Act (Wis. Stat. §§ 703.01 through 703.38) governs COAs.
Wisconsin HOA Lien Laws
HOAs in Wisconsin are often incorporated as nonprofit corporations and are subject to the state statutes that govern such corporations, including Wis. Stat. § 779.70, which governs maintenance liens by nonprofit corporations.
HOAs are also controlled by their governing documents, which include:
You often can find the specific rules regarding assessments liens in these governing documents. (You should have received copies of the CC&Rs and bylaws when you bought your home. 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 get behind in monthly maintenance 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 Wisconsin, a COA is only entitled to a lien if the association files a statement of lien in the county records within two years after the date the assessment becomes due. Once the lien is recorded, it is effective as of the date the assessment became due, regardless of when the claim is filed within the two-year period (Wis. Stat. § 703.165(3)).
An HOA must file its lien in the county records within six months of the due date (Wis. Stat. § 779.70(4)(a)). (If you are part of an HOA, check the CC&Rs to learn more 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 Wisconsin, unless the governing documents provide otherwise, a COA is permitted to include the following in its lien:
- past due assessments
- actual collection costs, and
- interest at a rate set by the COA, but no more than the legal rate (Wis. Stat. § 703.165(3),(6)).
To find out which charges a Wisconsin 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?)
Lien priority of COA liens. In Wisconsin, a COA lien is prior to certain other liens such as:
- tax liens
- mechanic’s liens recorded before the assessment became due, and
- a first mortgage lien recorded before the assessment became due (Wis. Stat. § 703.165(5)).
Lien priority of HOA liens. An HOA’s governing documents often address lien priority, and typically state that HOA liens are subordinate to a first mortgage. To find out the priority of an HOA lien in Wisconsin, check your CC&Rs and bylaws.
COA and HOA Foreclosures in Wisconsin
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.) If you default on the assessments, the COA or HOA can foreclose.
COA Must Provide Notice Before Foreclosing
A COA must mail written notice to a condo owner ten days before starting a foreclosure (Wis. Stat. § 703.165(7)).
COA and HOA Foreclosures
In Wisconsin, a COA may foreclose its lien in the same way that a mortgage on real property is foreclosed (Wis. Stat. § 703.165(7)). Since mortgage foreclosures in Wisconsin are judicial, this means the COA will file a lawsuit to begin the foreclosure. (Learn more about general foreclosure laws and procedures in Wisconsin.) 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 three years after recording the lien otherwise it loses the right to foreclose (Wis. Stat. § 703.165(7)). This is called the statute of limitations.
What to Do if You Are Facing Foreclosure by a COA or HOA in Wisconsin
If you are facing a COA or HOA foreclosure, you should consult with an attorney licensed in Wisconsin 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.)