I'm behind in HOA dues but not my mortgage. Can the HOA foreclose?

Question

I own a house in a development that has a homeowners' association (HOA). I've been keeping up with my mortgage payments but not on my monthly HOA dues. Can the HOA foreclose?

Answer

Probably yes. Any creditor with a lien on your home has the legal right to foreclose. So, if the HOA has a lien on your property, it may decide to initiate a foreclosure—even if you’re current on your mortgage payments.

HOA Lien Foreclosures

An HOA can foreclose its lien if state law and the Covenants, Conditions, and Restrictions (CC&Rs) of the community allow it to do so, which they typically do. The foreclosure will be judicial or nonjudicial, depending on the law in your state and the circumstances. To start a judicial foreclosure, the HOA will file a lawsuit against you in state court. For a nonjudicial foreclosure, the lender must follow specific procedures as set out by state law.

The CC&Rs might also contain specific requirements when it comes to foreclosing an HOA lien.

First Mortgages Usually Survive an HOA Foreclosure

HOA liens are often junior in priority to a first mortgage. CC&Rs typically contain a provision that makes an HOA lien subordinate to any first mortgage, even if the HOA lien is actually a prior lien.

Reasons Why the HOA Might Want to Foreclose Subject to a Mortgage

The HOA doesn’t have to consider the fact that you’re current on your mortgage payments when it decides whether to start a foreclosure. Sometimes, beginning a foreclosure is a tactic by the HOA to get you to pay your HOA dues. If you’re current on your mortgage payments, it would be pretty unwise to lose your home to an HOA foreclosure and hurt your credit because of delinquent HOA dues.

In other cases, the HOA might begin a foreclosure because its lien has super-lien status. Some states give HOA liens priority over a first mortgage for a specific number of months worth of delinquent assessments. If the HOA forecloses a super lien, it might (depending on state law) eliminate the mortgage. For this reason, the mortgage lender will usually pay off the super-lien amount to stop the foreclosure and keep its mortgage lien in place. So, if you live in a super-lien state, the HOA may initiate a foreclosure because it knows that if you don’t pay, the first-mortgage lender probably will.

Ultimately, if you're current on your mortgage but behind in your HOA dues, and your goal is to keep your home, you should pay the HOA dues, or else you might lose your property to a foreclosure.