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

Question

I own a house in an HOA community. I've been keeping up with my mortgage payments, but have fallen behind in my monthly 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 payments.

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. 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. (To learn more about how HOA foreclosures generally work, read HOA Liens & Foreclosures.)

The CC&Rs might 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 in priority to any first mortgage, even if the HOA lien is actually a senior lien.

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 payments, it would be quite unwise to lose your home to an HOA foreclosure and hurt your credit due to delinquent HOA dues. (Learn more about how foreclosure affects your credit in Foreclosure and Your Credit Score.)

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 certain number of months worth of delinquent assessments. 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 mortgage 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'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 home to a foreclosure.