Arizona HOA Foreclosures

Learn about the particular requirements and procedures for HOA and COA foreclosures in Arizona.

If you live in a house, condo, or townhome that’s part of a common interest community, you’re likely responsible for paying dues and assessments to the homeowners’ association (HOA) or condominium association (COA). If you don’t pay, in most cases, the HOA or COA can get a lien on your property, and could potentially foreclose that lien.

Read on to learn about the particular requirements for HOA and COA foreclosures in Arizona.

Arizona HOA and COA Lien Laws

In Arizona, there are two separate sets of statutes that govern association liens. One covers HOAs in planned communities (Ariz. Rev. Stat. § 33-1801 et seq.) and the other covers COAs (Ariz. Rev. Stat. § 33-1201 et seq.).

The two sets of laws are very similar.

How HOA and COA Liens Work

In most cases, once you fall behind in payments, the HOA or COA can get a lien on your property. 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 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 Arizona, the lien attaches to the property at the time the assessment becomes due. (Ariz. Rev. Stat. § 33-1807(A), § 33-1256(A)). The HOA or COA does not have to record the lien in the county records in order for it to be valid. (Ariz. Rev. Stat. § 33-1807(E), § 33-1256(E)). (In some states, though, the association must record the lien.)

Charges the HOA or COA May Include in the Lien

Arizona law limits the types of charges that the HOA or COA may include in the assessments lien. (Ariz. Rev. Stat. § 33-1807(A), § 33-1256(A)). Generally, the association may include, along with the past-due assessments:

  • Late payment fees. Fees for the late payment of assessments may be included in the assessments lien.
  • Reasonable collection fees. The association may include the costs expended in attempting to collect the past-due assessments in its lien.
  • Reasonable attorneys’ fees and costs. The HOA/COA may also include reasonable attorneys’ fees and costs incurred with respect to the assessments in the total lien amount.

HOA and COA Foreclosures in Arizona

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 an association’s right to foreclose has nothing to do with whether you are current on your home loan.

In Arizona, the HOA or COA may foreclose on its lien in the same manner as a mortgage lender can foreclose on a mortgage. (Ariz. Rev. Stat. § 33-1807(A), § 33-1256(A)). Because mortgages in Arizona must be foreclosed judicially, this means that the HOA or COA must file a lawsuit in court to foreclose its lien (Ariz. Rev. Stat. § 33-721). Arizona home loans, on the other hand, are usually secured by a deed of trust, rather than a mortgage, so residential foreclosures in Arizona are typically nonjudicial.

In addition, Arizona has laws that limit the HOA’s or COA’s ability to foreclosure in certain circumstances. The HOA/COA can’t foreclose unless:

  • the owner has been delinquent in paying the amounts secured by the lien (excluding collection fees, attorney fees, charges for late payments, and costs incurred with respect to the assessments) for a period of one year, or
  • the delinquent amount is $1,200 or more, whichever occurs first, as determined on the date the action is filed. (Ariz. Rev. Stat. § 33-1807(A), § 33-1256(A)).

Notice of Delinquent Assessments

At least 30 days before authorizing an attorney or a collection agency to begin collection activities, the association has to mail (by certified mail, return receipt requested) a written notice to the unit owner at the unit owner's address. The notice must state:

Your account is delinquent. If you do not bring your account current or make arrangements that are approved by the association to bring your account current within thirty days after the date of this notice, your account will be turned over for further collection proceedings. Such collection proceedings could include bringing a foreclosure action against your property.

The notice must be in boldfaced type or all capital letters and include the contact information for the person that the unit owner may contact to discuss payment.

HOA and COA Lien Priority in Arizona

An association’s lien is prior to all other liens, except for:

  • liens recorded before the declaration of CC&Rs
  • liens for real estate taxes (and other governmental charges), and
  • a first mortgage that was recorded prior to the lien arising. (Ariz. Rev. Stat. § 33-1807(B), § 33-1256(B)). (To learn more about lien priority and what happens to a first mortgage in an association foreclosure, see What happens to my mortgages if the HOA forecloses on its lien?)

Statute of Limitations

For the lien to remain valid, the HOA or COA must initiate an action to enforce the lien within six years from the date that the full amount of the assessments became due. (Ariz. Rev. Stat. § 33-1807(F), § 33-1256(F)).

Talk to a Lawyer

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

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