Kentucky HOA and COA Foreclosures

If you default on HOA or COA payments in Kentucky, the association could foreclose on your home.

If you live in a condominium, single-family house, or townhome that’s part of a common-interest development in Kentucky, you’re most likely responsible for paying dues and assessments (collectively called "assessments" in this article) to a condominium owners' association (COA) or homeowners' association (HOA).

If you fall behind in 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 and HOA lien laws and foreclosures in Kentucky.

Finding Kentucky’s COA and HOA laws

The Kentucky Condominium Act (Ky. Rev. Stat. Ann. §§ 381.9101 through 381.9207) applies to all condominiums created after January 1, 2011, and its provisions also generally apply to condominiums previously created as far as events or circumstances occurring after this date.

HOAs in Kentucky are often incorporated as nonprofit corporations and are subject to the state statutes that govern such corporations. The Kentucky Nonprofit Corporation Act can be found at § 273.161 et seq. of the state statutes. The rules regarding the operation of the HOA, including those regarding assessments liens, can be found in the association’s governing documents, like the Declaration of Covenants, Conditions, and Restrictions (CC&Rs). (Rules covering the operation of a COA are generally found in a Declaration of Condominium.)

How COA and HOA Liens Work

In most cases, a COA or HOA has the power to place a lien on your property if you become delinquent in paying the assessments. Generally, the lien will automatically attach to the home from the time that the assessments come due.

COA Liens

Some states require a COA to record its lien in the county where the property is located. But under Kentucky law, the recording of the declaration constitutes record notice of the existence of a COA lien, and no further recordation for any claim of lien is required. (Ky. Rev. Stat. Ann. § 381.9193(4)).

HOA Liens

To find out when an HOA lien attaches to the property, check the association’s governing documents.

Charges the COA or HOA May Include in a Lien

State law and the COA or HOA’s governing documents will usually set out the type of charges that may be included in the lien. (Ky. Rev. Stat. Ann. § 381.9167(1)(k), § 381.9193(1)).

What Charges May a COA Include?

Unless the declaration provides otherwise, in Kentucky, a COA is permitted to include the following in its lien:

  • past-due assessments
  • late charges
  • reasonable fines for violations of the declaration, bylaws, rules, and regulations (after giving the owner notice and an opportunity to be heard)
  • reasonable collection costs
  • reasonable attorneys’ fees and costs
  • certain fees (like for the preparation and recordation of amendments to the declaration or statements of unpaid assessments), and
  • interest at a rate established by the association, not to exceed 18%. (Ky. Rev. Stat. Ann. § 381.9191(2)).

What Charges May an HOA Include?

To find out which charges a Kentucky HOA may include in its lien, check the association's governing documents.

Lien Priority

Lien priority determines what happens to other liens, like mortgages and home equity lines of credit, if a COA or HOA lien is foreclosed. (To learn more about lien priority and HOA foreclosures, see What happens to my mortgages if the HOA forecloses on its lien?)

COA Lien Priority

Under Kentucky law, a COA’s lien is prior to all other liens, except for:

  • liens and encumbrances recorded before the declaration is recorded
  • liens for real estate taxes and other governmental assessments, and
  • a mortgage recorded before the date on which the assessment sought to be enforced became delinquent. (Ky. Rev. Stat. Ann. § 381.9193(2)).

HOA Lien Priority

To find out the priority of an HOA lien, check the association’s governing documents.

COA and HOA Foreclosures in Kentucky

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 mortgage payments.

COA Foreclosures

In Kentucky, a COA may foreclose its lien in the same manner as a mortgage on real estate. (Ky. Rev. Stat. Ann. § 381.9193(1)). A COA lien for unpaid assessments is extinguished unless the COA initiates an action to enforce the lien within five years after the full amount of the assessments becomes due. (Ky. Rev. Stat. Ann. § 381.9193(5)).

HOA Foreclosures

An HOA’s foreclosure rights come from the governing documents of the association. To find out the specific notice and foreclosure procedures that the HOA must follow if you fall behind in payments, check the association’s governing documents.

Talk to a Lawyer

If you’re behind in assessments and facing a COA or HOA foreclosure in Kentucky, consider consulting with a local attorney to discuss all legal options available in your particular circumstances.

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