Question

I own a house in a covenanted community. I've been keeping up with my mortgage, but have fallen behind in my monthly homeowner's association (HOA) dues. Can the HOA foreclose?

Answer

Yes. Any creditor with a lien on your home has the legal right to foreclose. This means that if the HOA has a lien on your property, it may decide to initiate a foreclosure, even if you’re current on your mortgage.

HOA Lien Foreclosures

An HOA can foreclose its lien if the Covenants, Conditions and Restrictions (CC&Rs) of the community allow it to do so, which they typically do. (Learn more in Nolo’s article What are Covenants, Conditions and Restrictions (CC&Rs) in HOAs?)

The foreclosure may be judicial or nonjudicial, depending on the law in your state. 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. (To learn more about the difference between judicial and nonjudicial foreclosure, and the procedures for each, see our Judicial v. Nonjudicial Foreclosure topic area.)

The CC&Rs may also contain certain 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 often contain a provision that makes the HOA lien junior to any first mortgage, even if the HOA lien is actually senior. (Learn more about lien priority in Nolo’s article What Happens to Liens and Second Mortgages in Foreclosure?)

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

The HOA doesn’t have to take into account the fact that you’re current on your mortgage payments when it decides whether or not to start a foreclosure. In fact, sometimes starting a foreclosure is a tactic on the part of the HOA to get you to get caught up with your HOA dues. If you’re current on your mortgage, it would be quite unwise to lose your home to foreclosure and destroy your credit due to delinquent HOA dues. (Learn more about how foreclosure affects your credit in Nolo’s article Foreclosure and Your Credit Score.)

In other cases, the HOA may begin a foreclosure because its lien has super-lien status. Some states give HOA liens priority over a first mortgage for a certain number of months worth of delinquent assessments. (Learn more in Nolo’s article Homeowners Association Super Liens.) If the HOA forecloses a super lien, it can eliminate the mortgage. For this reason, the mortgage lender will usually pay off the super-lien amount to stop the foreclosure and keep it’s lien intact. 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 are 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 may lose your home to an HOA foreclosure.

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