California HOA Foreclosures

If you fail to pay your HOA fees in California, the association can get a lien on your property and might foreclose on your home.

By , Attorney

When you buy a single-family home, townhome, or condominium that's part of a planned community with covenants, you'll most likely pay fees and assessments, often collectively called "assessments," to a homeowners' association (HOA). If you fall behind in the assessments, the association will likely first try to collect the debt using traditional methods. For instance, the association will probably call you and send letters. But if those tactics don't get you to pay up, the association will probably try other ways to collect from you. The association might take away your privileges to use the common facilities or file a lawsuit to get a money judgment against you.

Most HOAs also have the power to get a lien on your property if you become delinquent in assessments. Not only will an assessments lien cloud the title to the property, which hinders your ability to sell or refinance the home, but the property can also be foreclosed to force a sale to a new owner—even if the property has a mortgage.

In California, if your home is part of an HOA and you fall behind in assessments:

  • The HOA can get a lien on your home.
  • The association typically can charge you for overdue assessments, attorneys' fees, costs, late charges, and interest.
  • The association might choose to foreclose its lien.
  • Lien priority determines what happens to other liens, like a mortgage, if an HOA lien is foreclosed.

If the HOA starts a foreclosure, you might have a defense to the action, such as the association charged you too much, imposed unreasonable fees, or failed to follow state laws. Or you might be able to negotiate a way to get caught up on the overdue amounts and save your home. For example, you might be able to pay off the entire delinquency, negotiate a reduced payoff amount, or enter into a repayment plan.

How HOA Liens Work, Generally

Based on an association's Declaration of Covenants, Conditions, and Restrictions (CC&Rs) and state law, most HOAs have the power to place a lien on your home if you become delinquent in paying the assessments. Once you fall behind in payments, a lien will usually automatically attach to your property. In some cases, the association will record its lien with the county recorder to provide public notice that the lien exists, regardless of whether state law requires recording.

How HOA Liens in California Work

In California, a lien can't be recorded until 30 days after the HOA has sent you (the homeowner) notice about the delinquent assessments. The notice must include, among other things:

  • a general description of the collection and lien enforcement procedures, including a foreclosure warning
  • an itemized statement of the charges owed, and
  • various options to try to resolve the problem of the delinquent assessments. (Cal. Civ. Code § 5660.)

Before recording its lien for delinquent assessments, the association has to offer you and, if requested, participate in dispute resolution pursuant to the association's "meet and confer" program. (Cal. Civ. Code §§ 5900 to 5920, § 5660(e).) Under California law, you may also submit a request to meet with the board to discuss a payment plan. (Cal. Civ. Code § 5665.)

Assuming you don't work out a way to get caught up on the amounts due, the HOA can then record a lien on your property in the county records. (Cal. Civ. Code § 5675.) A notice must be mailed to all record owners no later than 10 calendar days after recording. (Cal. Civ. Code § 5675(e).)

Board Approval Required Before Lien Can Be Filed

Only the HOA's board of directors has the authority to decide to record a lien for delinquent assessments. The board must approve the decision by a majority vote of the board members in an open meeting and must record the vote in the minutes of that meeting. (Cal. Civ. Code § 5673.)

Charges the HOA May Include in the Lien

In California, an assessment is considered delinquent 15 days after it is due unless the CC&Rs provide for a longer amount of time. (Cal. Civ. Code § 5650.)

If an assessment is delinquent, the association may recover all of the following:

  • Assessments. The HOA can include amounts for unpaid assessments in the lien.
  • Reasonable attorneys' fees and costs. The association may include the costs expended in attempting to collect the past-due assessments in its lien.
  • Late charge. The association may include a late charge so long as it doesn't exceed 10% of the delinquent assessment or $10, whichever is greater, unless the CC&Rs specify a late charge in a smaller amount, in which case any late charge imposed can't exceed the amount specified in the CC&Rs.
  • Interest. The HOA may impose interest on all of the above charges, including the delinquent assessments, reasonable attorneys' fees, and reasonable fees and costs of collection at an annual interest rate not to exceed 12%, unless the CC&Rs specify a lesser amount, in which case the lesser rate of interest applies, beginning 30 days after the assessment becomes due. (Cal. Civ. Code § 5650, § 5675(a).)

HOA Lien Foreclosures in California

In California, 30 days after the lien was recorded, the HOA may foreclose its lien judicially or nonjudicially. (Cal. Civ. Code § 5700, § 5705, § 5710). Most HOA foreclosures in California are nonjudicial.

HOA Foreclosure Limitations

California law limits the HOA's ability to foreclose in some circumstances. The HOA can't foreclose unless:

  • the delinquent amount is $1,800 or more, not including any accelerated assessments, late charges, fees and costs of collection, attorneys' fees, or interest, or
  • the assessments secured by the lien are more than 12 months delinquent. (Cal. Civ. Code § 5720.)

If the HOA can't foreclose, it might instead sue you in court to get a money judgment. (Cal. Civ. Code § 5720.)

Also, before initiating a foreclosure, an association must also offer the "meet and confer" program or another alternative dispute resolution with a neutral third party. (Cal. Civ. Code §§ 5925 to 5965, § 5660(f).)

Right of Redemption Following Foreclosure

If the HOA forecloses using a nonjudicial process, the foreclosure is subject to a 90-day right of redemption after the sale. (Cal. Civ. Code § 5715.) To redeem the property, you must pay all assessments, interest, attorneys' fees, and possibly costs of repair. (See Barry v. OC Residential Properties, LLC, 194 Cal.App.4th 861 (2011).)

In judicial foreclosures, the redemption period is:

  • 90 days, if the proceeds of the sale are sufficient to satisfy the debt or
  • one year, if the proceeds from the sale are insufficient to satisfy the delinquency. (Cal. Code Civ. Proc. § 729.030(a),(b).)

HOA Liens and Your Mortgage

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 isn't dependent on whether you're up to date on your mortgage. Instead, lien priority determines what happens in a foreclosure.

What Is Lien Priority?

The priority of liens establishes who gets paid first following a foreclosure sale and often determines whether a lienholder will get paid at all. Liens generally follow the "first in time, first in right" rule, which says that whichever lien is recorded first in the land records has higher priority than later recorded liens. A first-lien has a higher priority than other liens and gets the first crack at the foreclosure sale proceeds. If any proceeds are left after the first lien is paid in full, the excess proceeds go to the second lienholder until that lien is paid off, and so on. A lien with a low priority might get nothing from a foreclosure sale.

But state law or an association's governing documents can adjust lien priority.

HOA Lien Priority in California

In California, an HOA lien is prior to all other liens recorded after the notice of assessment, except that the CC&Rs may provide that the HOA lien can be subordinated to any other liens and encumbrances. (Cal. Civ. Code § 5680). So, depending on the recording date, a first-mortgage lien might remain on the property following an HOA's foreclosure; the purchaser at the foreclosure sale takes the property's title subject to the lien of the first-mortgage holder.

Talk to a Lawyer If You're Facing an HOA Foreclosure in California

If you're facing an HOA foreclosure in California, consider consulting with a foreclosure attorney to discuss all legal options available in your particular circumstances.

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