Homeowners in planned, covenanted communities are generally required to pay dues and special assessments to a homeowners’ association (HOA) to cover things like common area maintenance and improvements to community facilities. If you fall behind in your HOA dues and assessments, you will need to get caught up. Otherwise, the HOA can get a lien on your home that could potentially lead to a foreclosure.
Read on to learn about the different ways that you can bring past-due HOA amounts current so you can avoid a foreclosure.
The rules of an HOA community are set forth in what is called the Declaration of Covenants, Conditions, and Restrictions (CC&Rs). The CC&Rs typically allow the HOA to place a lien on your property if you stop paying the monthly fees and/or any special assessments.
Depending on the terms in the CC&Rs, you can be held responsible for paying:
Once the HOA obtains a lien on your property, it may foreclose on that lien as permitted by the CC&Rs and state law. (Learn more about homeowners’ association liens and how they can be foreclosed in HOA Liens & Foreclosures: An Overview.)
Some states, like California, only allow a HOA to foreclose after a certain amount of past-due assessments have accumulated or a certain amount of time has passed. (To learn about the laws governing HOA foreclosures in your state, review your state’s statutes or talk to a lawyer. You can find out how to do your own legal research in Nolo’s Laws and Legal Research section.)
If you're behind on your HOA dues, there are several options for you to get caught up before the HOA initiates a foreclosure. And, if your HOA forecloses because you stopped paying the dues, you might be able to get your home back if your state provides a right of redemption.
The quickest way to get caught up and prevent the HOA from pursuing a foreclosure is to pay all of the past-due amounts in one lump sum, including any late fees or other fees.
If you can't come up with enough cash to get current on your HOA dues all at once, you might be able to convince the HOA to accept a reduced amount to satisfy the debt. The likelihood of this tactic working is questionable though. Some HOAs will make a deal with you to help you get current, but others will not.
If the HOA isn't open to the idea of accepting a reduced amount to bring you current, it might consider allowing you to enter into a payment plan to get caught up on your HOA dues.
Colorado law, in fact, requires HOAs to offer payment plans to homeowners who are behind in HOA dues. As of January 1, 2014, a Colorado HOA must make a good-faith effort to coordinate with a delinquent homeowner to set up a payment plan to pay off past-due assessments and other delinquent payments before pursuing legal action, like a foreclosure, against the homeowner.
If the HOA forecloses on your home, some states give you a “redemption period” to repurchase your property following the foreclosure sale.
A redemption period is a specific time period given to homeowners following foreclosure during which they can buy back, or “redeem,” their property from the entity or person that purchased it at the foreclosure sale. California law, for example, provides homeowners a 90-day right of redemption after a nonjudicial HOA foreclosure. (Learn more about redemption periods.)
If your state doesn't provide a specific right of redemption after an HOA forecloses, there might be a state law that allows you to redeem the property following a mortgage foreclosure sale, which could apply to an HOA foreclosure as well.
HOAs have been known to foreclose even if a homeowner only owes a relatively small amount of outstanding dues. If you're struggling to pay your HOA dues, it's recommended that you contact the HOA as soon as possible to let them it you intend to pay and to find out what options are available for getting caught up before the foreclosure process begins.
If your HOA has already initiated a foreclosure, consider consulting with an attorney in your state to discuss all legal options available in your particular circumstances.