FAQs on HOA Foreclosures

Read our FAQs to learn how HOA dues work, what happens if you don’t pay them, whether an HOA can foreclose on your home, and more.

By , Attorney

If you own a home in a planned development, you're probably a member of a homeowners' association (HOA). The HOA has a lot of control over homeowners and their properties; it manages the community, enforces the rules and restrictions associated with living there, and decides how much to charge members in dues and special assessments. If you don't pay the dues and assessments, the HOA has several options to get you to pay up, like suing you for a money judgment or foreclosing on your home.

If you're behind on your HOA dues and assessments, check out the following FAQs to find out what methods the HOA might use to try to collect from you, how the HOA can foreclose on your home, your options for getting current on the debt, and more.

What is an HOA?

A homeowners' association (HOA) is a non-profit corporation that a developer creates when planning a community. The HOA is responsible for managing and maintaining the development.

If you buy a home that's part of an HOA, you automatically become a "member" of the association—you can't opt out. By purchasing your home, you agree to abide by the terms and conditions set out in the HOA's governing documents, including the Declaration of Covenants, Conditions, and Restrictions (CC&Rs). The CC&Rs describe the requirements and restrictions on how homeowners may use their properties. For example, the CC&Rs might say that you can't paint your house a particular color, hang a clothesline, or decorate your lawn with pink flamingoes. The CC&Rs also set out the rules for collecting dues and assessments.

How do HOA dues work?

If you live in a planned community, you're probably a member of a homeowners' association (HOA). Each year, the HOA's board of directors develops a budget for the community and decides how much to charge each unit or household, usually as monthly dues or on some other fixed schedule, such as quarterly or annually. The dues and special assessments pay for maintaining the development's common areas, routine maintenance and repairs in the neighborhood, and various community services.

To figure out how much to charge each household in regular assessments, the board sets an "operating budget" and a "reserve budget" each year. The operating budget pays for everyday expenses needed for the development, like landscaping the common areas, pool maintenance, trash removal, and security services. The reserve fund covers any unexpected repairs that come up. For example, the HOA might use reserve funds to pay for fixing potholes or a damaged sidewalk. By collecting money for a reserve fund, the board ensures that the HOA has money available to pay for unexpected repairs when they come up.

But sometimes, the HOA board isn't accurate in its prediction about what costs will arise and when. So, the monthly dues and reserves could fall short. If, say, the monthly operating expenses are higher than expected, or an unexpected catastrophe or natural disaster happens that causes damage that insurance doesn't pay, the board may assess a special assessment. A "special assessment" is a one-time charge for an unexpected cost that the HOA's reserve funds won't cover.

Usually, the board can charge relatively small special assessments—for example, less than $5,000—without getting approval from the HOA's members. But most CC&Rs require a majority vote of the members before the board can make a large special assessment. Also, some states have laws that restrict an HOA's ability to impose special assessments. Certain states limit the amount an HOA can collect in special assessments during one calendar year, or require the owners to vote on imposing special assessments over a specific amount.

What happens if you don't pay HOA dues?

If you don't pay your homeowners' association (HOA) dues and assessments, the HOA will probably charge fees and interest on the unpaid amounts. The HOA then has several options to get you to pay all of these amounts, like:

  • restricting your privileges in the community
  • filing a lawsuit against you in court to get a money judgment
  • getting a lien on your property, or
  • foreclosing your home.

Restricting Your Privileges

The HOA might restrict your access to recreational facilities like gyms, pools, and tennis courts to get you to pay overdue amounts.

Filing a Lawsuit Against You in Court

If you don't pay the dues and assessments, an HOA might file a lawsuit against you to get a money judgment in the overdue amount, plus fees and costs. After a court issues a judgment for the HOA, the HOA can use regular collection techniques, like taking money from your bank account (called a "levy") or garnishing your wages to collect the amount owed.

Getting a Lien on Your Property

In most cases, the HOA has a right to a lien on your home. Usually, the HOA gets a lien on the property as of:

  • the date the dues or assessments became due or
  • the date when the CC&Rs were recorded in the land records.

The lien automatically attaches to the property, which means the HOA doesn't have to go to court to get a judgment to get the lien. But even when an HOA automatically gets a lien, it might still have to record a document, like a notice of lien, in the land records. While some states don't require the HOA to record the lien, many HOAs still take this step. A lien on the property will hinder your ability to sell the home or refinance the property, as the lien will have to be paid off for the new owner to get clear title.

Also, once the HOA has a lien on your home, it might foreclose (see below).

Foreclosing Your Home

After an HOA gets a lien on your property, it may foreclose as allowed by the CC&Rs and state law. In a foreclosure, the HOA forces the home's sale either with a judicial or nonjudicial process, depending on state law and the circumstances. Some states prohibit foreclosures until you're a specific number of months or amount of money behind. (See "Can your house be foreclosed for not paying HOA dues?" below for more information.)

Can your house be foreclosed for not paying HOA dues?

Once a homeowners' association (HOA) has a lien on your home, it may foreclose. The mechanics of foreclosing depend on state law. In some states, the HOA will file a lawsuit in court to foreclose (known as a "judicial foreclosure"). If successful, the HOA sells your house and uses the proceeds to pay off the debt. You keep the balance, as long as other creditors aren't also in the picture. In other states, the HOA can choose to use an out-of-court process (a "nonjudicial foreclosure") rather than going through the court. In this process, the HOA follows procedures described in the state statutes and the CC&Rs. For instance, the HOA might have to mail you a notice of foreclosure and publish the notice in a newspaper. Then, the HOA sells the home and applies the sale proceeds to pay off your debt.

In some states, the HOA can't foreclose until you're a certain number of months or a specific amount of money behind in assessments. For example, a California HOA can't start a foreclosure unless the assessments are more than 12 months delinquent or the past-due assessments equal $1,800 or more. (Cal. Civ. Code § 5720).

If you're facing a foreclosure due to unpaid HOA dues or assessments, consider talking to a foreclosure attorney in your state to discuss all legal options, like working out a repayment plan with the HOA, available in your particular circumstances.

Will my HOA foreclose?

If you don't pay the required dues and assessments to your homeowners' association (HOA), the HOA might file a lawsuit against you to get a money judgment for the overdue amount, plus fees and costs. After a court issues a judgment for the HOA, the HOA can use standard collection techniques, like taking money from your bank account (called a "levy") or garnishing your wages to collect the amount owed.

But the HOA might instead decide to foreclose its lien and sell your home if it thinks you don't have any funds in your bank account or from a job to pay a money judgment. The proceeds from the foreclosure sale go toward paying off the debt. However, if the property is subject to a mortgage, the HOA might decide not to foreclose unless it has a super lien.

What happens to my mortgage if my HOA forecloses?

An HOA's CC&Rs or state laws usually say that an HOA lien takes priority over all liens recorded after the CC&Rs were recorded except a first mortgage or deed of trust recorded before the dues or assessments became delinquent. So, in this situation, a first-mortgage lien would remain on the home after an HOA foreclosure. (HOA super liens are different, though.)

But the HOA is under no obligation to make the mortgage payments. So, after the HOA forecloses, assuming the borrower stops making the mortgage payments, the HOA can decide to:

  • pay the first mortgage holder to prevent it from foreclosing (but because the HOA has no obligation to pay, it probably won't), or
  • let the first-mortgage holder foreclose. That way, the home will get a new owner at the foreclosure sale—either the first-mortgage holder or a third-party purchaser—who then becomes responsible for paying the dues and assessments.

If you're facing a foreclosure due to unpaid HOA assessments, consider talking to a foreclosure attorney in your state to discuss all of your legal options, like possible defenses, and working out a repayment plan with the HOA.

What kinds of CC&R violations can lead to a foreclosure?

If your home is part of a homeowners' association (HOA), the rules of the community are set out in the Declaration of Covenants, Conditions, and Restrictions (CC&Rs). Some common rule violations include:

  • Deferring maintenance for your home or property. It's usually a violation to neglect to routinely mow your lawn or maintain the home's exterior in a reasonable condition. The CC&Rs could also require a defensible space for fire protection.
  • Decorating your home in a way that violates the CC&Rs. The CC&Rs might limit the color you can paint your home or what type of architectural changes you may make. They might also prohibit political signs.
  • Violations of pet restrictions. Some HOAs limit the type and number of pets you can own. Some CC&R's ban specific kinds of pets—like livestock or certain dog breeds—or limit the number of pets you can have.
  • Parking your vehicles inappropriately. CC&Rs sometimes prohibit vehicle parking on the streets or in driveways and limit overnight guest parking.
  • Storing your trash or other unsightly items somewhere not allowed. The CC&Rs might require your trash containers, utility meters, and clotheslines to be enclosed or appropriately screened from view.

If you violate the community's rules, as set out in CC&Rs—say you have off-season holiday decorations adorning your home—you'll probably get a few notices telling you to remove them. If you don't take any action to remedy the issue, the HOA might take one or more of the following steps:

  • charge you a fine until you fix the problem (for example, $100 per day), which state law might limit
  • enter your property and take care of the issue, or
  • take away your privileges to use the common facilities, like the community pool or gym, until you remedy the matter.

If you don't correct the problem or the HOA doesn't fix it for you, the HOA might file a lawsuit against you, asking the court to order you to handle it. The HOA might also ask the court for a money judgment against you for any unpaid fines. After a court grants a money judgment in favor of the HOA, the HOA can usually collect the amount through traditional collection methods, like taking money from your bank account or garnishing your wages. Or, after getting a money judgment from the court, the HOA may record that judgment in the county records as a lien against your property. (Sometimes, depending on state law, an HOA can include fines in its assessments lien. Other times, unpaid fines for CC&R violations, unlike overdue dues and assessments, don't automatically become a lien on your property.) Then, depending on state law and the HOA's governing documents, the HOA might foreclose that lien.

Though, some states don't allow liens for unpaid fines. And certain states restrict or prohibit foreclosures when an HOA lien consists only of unpaid fines and related costs like attorneys' fees. For example, in Florida, fines must be at least $1,000, or they can't become a lien against the property. (Fla. Stat. Ann. § 720.305). As another example, Texas law prohibits HOAs from foreclosing liens that consist just of fines, attorney's fees associated with those fines, and amounts owed to the HOA for compiling, producing, and reproducing its records. (Tex. Prop. Code Ann. § 209.009). If the lien also includes other amounts besides fines and related attorneys' fees, such as unpaid assessments, the HOA can probably foreclose.

How can I stop my HOA from foreclosing?

If you're facing a foreclosure by a homeowners' association (HOA), you might be able to request—or the HOA might require—a preforeclosure meeting to discuss the situation. You can attempt to resolve the problem at the meeting, like by agreeing to a repayment plan or settling for a reduced lump-sum amount.

For example, Colorado law generally requires HOAs to make a good-faith effort to coordinate with delinquent homeowners to set up a one-time payment plan before pursuing legal action, like a foreclosure. The payment plan must last six months or longer. (Colo. Rev. Stat. § 38-33.3-316.3). So, suppose you're six months overdue on your HOA dues of $300 a month—that is, you're $1,800 behind. The HOA might allow you to pay $200 extra each month over the next nine months to get caught up. So, you'll have to pay the HOA $500 a month for nine months. At the end of the repayment period, you resume making your regular HOA payments of $300 a month.

If the negotiations fail and your HOA begins a foreclosure, consider contacting a foreclosure lawyer to learn about more options. You might have a defense to the foreclosure, like:

  • the HOA charged you too much or charged you unreasonable fees
  • the CC&Rs don't authorize the HOA's charges
  • the HOA failed to follow state laws
  • the HOA misapplied your payments
  • the HOA didn't record its lien if legally required to do so, or
  • the CC&R's don't authorize the HOA to foreclose.

HOAs sometimes start foreclosures when homeowners aren't that far behind in payments. If you're facing an HOA foreclosure and need help negotiating an alternative—or you think you have a legitimate defense to the foreclosure—consider talking to a foreclosure attorney who can advise you about what to do in your circumstances.

Can I get my home back after an HOA foreclosure?

If you lose your home to a foreclosure by a homeowners' association (HOA), you might be able to get the property back. Some states have a law that allows foreclosed homeowners to redeem their home following an HOA foreclosure. The redemption period, if state law provides one, varies from state to state. And, state law sometimes provides different redemption periods based on the situation. For example, the length of the redemption period might vary depending on if:

  • the property is part of an HOA or a condominium owners' association (COA)
  • the foreclosure is nonjudicial or judicial, or
  • the homeowner vacates (permanently moves out of) the property before the foreclosure ends.

Even if your state's laws don't provide you with a right of redemption following an HOA foreclosure, your state might have a law that allows homeowners to redeem the property after a regular mortgage or deed of trust foreclosure. That general redemption law could apply to HOA foreclosures too.

To redeem the property, you'll typically have to pay the overdue dues and assessments (or the price the buyer at the foreclosure sale paid), plus interest and attorneys' fees and costs.

How will an HOA foreclosure affect my credit score?

If you fall behind in homeowners' association (HOA) dues and assessments, your HOA might not report your delinquent payments to the three major credit bureaus—Equifax, Experian, and TransUnion. The HOA has to become a member of the bureaus to report the late payments, and because most HOAs are small organizations, many don't sign up for membership due to the cost and reporting requirements. So, your delinquent dues and assessments might not hurt your credit score.

However, if the HOA turns the debt over to a collection agency, the agency could report the debt to the credit bureaus. Or a specialty reporting company might report the delinquencies to the bureaus. For example, Sperlonga, a data and analytics firm, offers a credit-reporting service to HOAs. An HOA can sign up with Sperlonga and report whether owners make their payments. Sperlonga then passes the information along to Equifax, one of the three largest credit bureaus.

If you go through an HOA foreclosure, the foreclosure will probably show up in your credit history and damage your credit score—even if the HOA doesn't report it. Here's why: An HOA foreclosure is judicial or nonjudicial. A judicial foreclosure involves the court system. In a nonjudicial foreclosure, the HOA follows a series of out-of-court steps, which typically involves recording a notice in the land records. Both court filings and land records are available to the public. If the bureaus find out about your HOA foreclosure from the public record, which they usually do, they'll add this information to your credit reports. Because your credit scores are based on what's in your credit reports, your scores (you have more than one) will probably take a hit.

According to FICO, a foreclosure could lower a person's credit score by 100 points or more. The exact number of points that will fall off your score depends primarily on how good your credit score was before the foreclosure. Someone who has a high credit score before a foreclosure loses more points. A foreclosure has less impact on someone who already has a low credit score.

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