If you live in a planned development, you’re probably part of a condominium owners’ association (COA) or homeowners' association (HOA). COAs and HOAs are typically nonprofit corporations that are responsible for managing and maintaining the community. The association has a lot of power over the residences and homeowners in a planned neighborhood. It creates and enforces the rules of the community. The association also determines how much members have to pay in dues and assessments (collectively referred to as “assessments”).
Residents who live in this kind of a community setting—whether it’s a condominium, townhouse, or single-family home—in Illinois usually have to pay assessments to their COA or HOA. If you fall behind in those payments, in most cases, the COA or HOA can get a lien on your home that could lead to a foreclosure.
Read on to learn about COA or HOA foreclosures and related laws in Illinois.
The Illinois Condominium Property Act (765 Ill. Comp. Stat. 605/1 through 605/35) governs COAs. The Illinois Common Interest Community Association Act (765 Ill. Comp. Stat. 160/1-1 through 160/1-90) governs HOAs, although it’s not very comprehensive when compared to the Condominium Property Act.
An HOA’s governing documents, which include the Declaration of Covenants, Conditions, and Restrictions (CC&Rs) and bylaws, usually contain specific information about the rules of the community, including assessments liens. You should have received copies of the CC&Rs and bylaws when you purchased your property.
Generally, a COA or HOA has the power to place a lien on your property if you become delinquent in paying the assessments. The lien will typically automatically attach to the home from the time that the assessments come due.
In Illinois, a COA is entitled to a lien if the condo owner fails or refuses to pay the common expenses or fines. (765 Ill. Comp. Stat. 605/9(g)(1)).
If you’re part of an HOA, check the association’s governing documents to learn about the association’s right to place a lien on your home if you don’t pay the assessments.
State law, as well as the COA or HOA’s declaration and bylaws, generally set out the type of charges that may be included in the lien.
COAs. Under Illinois law, a COA is permitted to include the following in its lien:
HOAs. To find out which charges an Illinois HOA may include in its lien, check the association's governing documents.
In Illinois, a COA lien is prior to all other liens, except for:
An HOA’s CC&Rs usually include a provision regarding lien priority, and typically say that assessments and liens are subordinate to a first mortgage. To find out the priority of a particular HOA lien in Illinois, check the association’s governing documents.
If you default on the assessments, the COA or HOA may 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 home loan.
A COA lien may be foreclosed in the same manner as a mortgage once the association records the lien in the county records. (765 Ill. Comp. Stat. 605/9(h)).
To find out about an HOA’s right to foreclose if you become delinquent in paying the assessments, read your association’s governing documents.
If you’re behind in assessments and facing a COA or HOA foreclosure in Illinois consider consulting with a local attorney to discuss all legal options available in your particular circumstances.