When you buy a single-family home, townhome, or condominium that's part of a planned community with covenants, you'll most likely pay fees and assessments, often collectively called "assessments," to a homeowners’ association (HOA) or condominium owners’ association (COA). If you fall behind in the assessments, the association will likely first try to collect the debt using traditional methods. For instance, the HOA will probably call you and send letters. But if those tactics don’t get you to pay up, the association will probably try other ways to collect from you. The association might take away your privileges to use the common facilities or file a lawsuit to get a money judgment against you. Most HOAs and COAs also have the power to get a lien on your property if you become delinquent in assessments. Not only will an assessments lien cloud the title to the property, which hinders your ability to sell or refinance the home, but the property can also be foreclosed to force a sale to a new owner—even if the property has a mortgage.
Different sets of state laws often govern COAs and HOAs. Massachusetts’ condominium laws can be found in Part II, Chapter 183A of the state’s General Laws. HOAs in Massachusetts are often incorporated as nonprofit corporations and are subject to the state statutes that govern such corporations, which can be found in Part I, Chapter 180 of the Massachusetts General Laws. Also, the policies about how an association operates, including those regarding assessments liens, can be found in the association’s governing documents, like the Declaration of Covenants, Conditions, and Restrictions (CC&Rs), bylaws, and rules and regulations.
If your home is part of a COA or HOA and you fall behind in assessments in Massachusetts:
If the COA or HOA initiates a foreclosure, you might have a defense to the action, or you might be able to negotiate a way to get caught up on the overdue amounts and save your home.
Based on the association’s governing documents, like the CC&Rs, and state law, a COA or HOA can usually get a lien on your home if you're delinquent in paying the assessments. In some cases, the association will record its lien with the county recorder to provide public notice that the lien exists, regardless of whether state law requires recording.
In Massachusetts, a COA is entitled to a lien for assessments from the time the assessments are due. (Mass. Gen. Laws ch. 183A, § 6(a)(ii)). Once an assessment has been at least 60 days late, the COA must send notice by certified and first-class mail to the condo owner stating the amount of the delinquency. (Mass. Gen. Laws ch. 183A, § 6(c)).
If you're part of an HOA in Massachusetts, check the association’s governing documents to learn about the HOA’s right to get a lien on your home if you don’t pay the assessments.
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.
In Massachusetts, a COA is permitted to include certain charges in its lien, including:
If you make a written request, the COA must provide you with a statement setting forth the amount of unpaid common expenses and any other sums which have been assessed. It must send this statement within ten business days after it receives your request. (Mass. Gen. Laws ch. 183A, § 6(d)). The COA may charge a reasonable fee for providing the statement.
To find out which charges a Massachusetts HOA may include in its lien, check the association's CC&Rs and other governing documents.
If you default on the assessments, the COA or HOA may foreclose. In Massachusetts, a COA must file a civil action (lawsuit) to foreclose its lien. (Mass. Gen. Laws ch. 183A, § 6(c), Mass. Gen. Laws ch. 254, § 5, Mass. Gen. Laws ch. 254, § 5A). To find out about an HOA’s right to foreclose if you become delinquent in paying the assessments, read the association’s governing documents.
A common misconception is that the association can't foreclose if you're current with your mortgage payments. But an association’s right to foreclose isn’t dependent on whether you’re paid up on your mortgage. Instead, lien priority determines what happens in a foreclosure.
Generally, a foreclosure by a COA or HOA usually won’t eliminate a first mortgage because the association’s lien is normally lower in priority.
The priority of liens establishes who gets paid first following a foreclosure sale and often determines whether a lienholder will get paid at all. Liens generally follow the “first in time, first in right” rule, which says that whichever lien is recorded first in the land records has higher priority than later recorded liens. A first-lien has a higher priority than other liens and gets the first crack at the foreclosure sale proceeds. If any proceeds are left after the first lien is paid in full, the excess proceeds go to the second lienholder until that lien is paid off. And so on. A lien with a low priority might get nothing from a foreclosure sale.
But state law or an association's governing documents might adjust lien priority.
In Massachusetts, a COA’s lien is prior to all other liens, except for:
So, a foreclosure by a COA usually won’t eliminate a first mortgage because the association’s lien is normally lower in priority. But under some circumstances, a COA lien for delinquent assessments has priority over even a lender’s first mortgage. This kind of lien is called a “super lien.” In Massachusetts, six months’ worth of delinquent common expense assessments, including costs and attorneys' fees, have super-lien status. (Mass. Gen. Laws ch. 183A, § 6(c)).
To find out the priority of an HOA lien in Massachusetts, check the association’s governing documents.
If you're facing a COA or HOA foreclosure in Massachusetts, consider consulting with a foreclosure attorney to learn more about the law and how it applies to your situation and to discuss all legal options available in your particular circumstances.