Alabama HOA Foreclosures

If you default on HOA or COA payments in Alabama, you might face a foreclosure.

Residents who live in a community setting—whether it’s a condominium, townhouse, or single-family home—in Alabama usually have to pay assessments to their HOA or COA. If you fall behind in those payments, in most cases, the HOA or COA can get a lien on your home that could lead to a foreclosure.

In this article, you’ll learn about HOA and COA foreclosures and related laws in Alabama.

Alabama HOA and COA Lien Laws

On May 26, 2015, the Alabama Legislature passed the Alabama Homeowners’ Association Act. (Ala. Code §§ 35-20-1 through 14). This law applies to HOAs created on or after January 1, 2016. HOAs in existence before this date can elect to be governed by the Act. Rules about the operation of the HOA, including those covering assessments liens, are usually also found in the association’s Declaration of Covenants, Conditions, and Restrictions (CC&Rs). (HOAs formed before the Alabama Homeowners’ Association Act went into effect are generally governed by their CC&Rs.)

Chapters 8 (the Condominium Ownership Act) and 8A (the Alabama Uniform Condominium Act) of Title 35 of the Code of Alabama govern COA activities in the state.

How HOA and COA Liens Work

Almost all HOAs and COAs have the power to place a lien on the property if the homeowner becomes delinquent in paying the monthly dues or special assessments (collectively referred to as “assessments”). Once a homeowner becomes delinquent on the assessments, usually a lien will automatically attach to that homeowner's property.

HOA Liens

Under the Alabama Homeowners’ Association Act, an HOA gets a lien for unpaid assessments on and from the date the assessment is due. (Ala. Code § 35-20-12).

HOA lien priority. Lien priority determines what happens to other liens, mortgages, and lines of credit if an HOA (or COA) lien is foreclosed. Under Alabama law, an HOA assessments lien has priority over subsequent liens, except for:

Notice of the lien. The HOA must give the property owner written notice of the assessment and lien by personal delivery or first-class mail. (Ala. Code § 35-20-12).

Notice before the HOA records the lien. Within 12 months from the date the assessment becomes due, the HOA has to record a statement of lien in the office of the judge of probate. At least 30 days before recording the statement of lien, the HOA has to give the owner a written notice by certified mail. (Ala. Code § 35-20-12).

COA Liens

In Alabama, a COA gets a lien on a unit for any assessments or fines imposed against the owner from the time the assessment or fine becomes due. (Ala. Code § 35-8A-316(a)).

Charges the COA may include in the lien. Alabama law sets out the types of charges that may be included in the assessments lien. (Ala. Code § 35-8A-316(a)). Unless the declaration of condominium provides otherwise, the association may include:

  • Assessments. The COA can include amounts for unpaid assessments in the lien.
  • Late charges. The COA may also impose charges for late payment of assessments against unit owners.
  • Fines. The association may levy reasonable fines for violations of the declaration, bylaws, and rules and regulations of the association.
  • Other charges. The COA may also impose reasonable charges for the preparation and recordation of amendments to the declaration or statements of unpaid assessments.
  • Interest. The COA is permitted to charge interest on unpaid assessments at the rate established by the association, but no more than 18% per year. (Ala. Code § 35-8A-315(b)).
  • Reasonable attorneys’ fees and costs. Reasonable attorneys’ fees and costs may be included in a judgment or decree to enforce the lien.

COA lien priority. A COA lien is prior to all other liens, except for:

  • liens and encumbrances recorded before the declaration of condominium
  • liens for real estate taxes (and other government charges), and
  • a first mortgage or deed of trust that was recorded before the date on which the assessment sought to be enforced became delinquent. (Ala. Code § 35-8A-316(b)).

COA super liens. Under certain circumstances, a COA lien for delinquent assessments may have priority over a first mortgage or deed of trust. This kind of lien is called a super lien. In Alabama, six months’ worth of delinquent common expense assessments have super lien status. (Ala. Code § 35-8A-316(b)). (Alabama’s Homeowners’ Association Act doesn’t create a super-lien priority for HOA assessment liens. Though, some HOAs created before the Homeowners' Association Act went into effect might try to claim super-lien status based on their CC&Rs.)

Getting a statement of assessments from a COA. If you make a written request, the COA must provide you with a statement of the unpaid assessments that are due. If the association doesn’t mail or otherwise provide you with the statement within ten business days after receiving your request, the lien is released. (You remain liable for the debt, but the lien is extinguished.) The COA may charge up to $25 for issuing the statement. (Ala. Code § 35-8A-316(h)).

HOA and COA Foreclosures in Alabama

If you default on the assessments, the HOA or COA can foreclose. A common misconception is that the association can’t foreclose if you’re current with your mortgage payments. But the association’s right to foreclose has nothing to do with whether you’re current on your mortgage payments.

Foreclosures by HOAs

Under the Alabama Homeowners’ Association Act, an HOA lien may be foreclosed as provided in the declaration (or other governing documents) or judicially. Under the Act, notice of the sale must be by publication once a week for three consecutive weeks in the counties in which the property is located. (Ala. Code § 35-20-12).

Foreclosures by COAs

In Alabama, a COA may foreclose on its lien in the same manner as a mortgage on real estate, but the association must give reasonable advance notice to the unit owner and all lienholders of record of the unit. (Ala. Code § 35-8A-316(a)).

In order for the lien to remain valid, the COA must bring an action to enforce the lien within three years after the full amount of the assessments becomes due. (Ala. Code § 35-8A-316(e)).

Talk to a Lawyer

If you’re behind in assessments and facing an HOA or COA foreclosure in Alabama, consider consulting with a local attorney to discuss all legal options available in your particular circumstances.

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