If you live in a single-family home, condominium, or townhome that's part of a common interest community in Minnesota, you're most likely responsible for paying dues and assessments (collectively called “assessments”) to a homeowners' association (HOA). If you fall behind in payments, in most cases, the HOA can get a lien on your property that could lead to a foreclosure.
Read on to learn about HOA liens and foreclosures in Minnesota.
Generally, an HOA has the power to place a lien on a property if the homeowner falls delinquent in assessments. The lien will usually automatically attach to that homeowner's property once the assessments are past due.
Under Minnesota law, an association has a lien on a unit for any assessment levied against that unit from the time the assessment becomes due. If an assessment is payable in installments, the full amount of the assessment becomes a lien from the time the first installment became due. (Minn. Stat. § 515B.3-116(a)).
The recording of the HOA documents that create the common interest community, like a Declaration of Covenants, Conditions, and Restrictions, constitutes record notice and perfection of the lien. No further recording of the claim of lien for assessments is required. (Minn. Stat. § 515B.3-116(a)). (Some states, however, require an association to record its lien in the county records.)
Minnesota law sets out the types of charges that an HOA may include in its assessments lien. (Minn. Stat. § 515B.3-115(e)(4) and (5), § 515B.3-1151(e)(4) and (5)§ 515B.3-116(a), § 515B.3-102(a)(11)). Unless the declaration provides otherwise, the association generally may include charges for:
Also, in a foreclosure, the HOA is entitled to recover foreclosure attorneys' fees and costs if authorized by the declaration or bylaws (in a nonjudicial foreclosure) or as determined by the court (in a judicial foreclosure). (Minn. Stat. § 515B.3-116(h)(4)).
Lien priority determines what happens to other liens, mortgages, and lines of credit if an 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?)
While an HOA's lien is typically considered prior to other liens, some liens get priority over an HOA lien, including:
If you make a written request to the HOA, the association must provide you with a statement of the assessments that are due within ten business days after receiving the request. (Minn. Stat. § 515B.3-116(g)).
If you default on the assessments, the HOA may foreclose. A common misconception is that the association can't foreclose if you're up to date with your mortgage payments. But the association's right to foreclose has nothing to do with whether you're current on your home loan payments.
In Minnesota, an HOA may foreclose its lien either judicially or nonjudicially. (Minn. Stat. § 515B.3-116(h)(1)).
The redemption period is generally six months from the date of sale, though it may be a lesser period if authorized by law. (Minn. Stat. § 515B.3-116(h)(4)).
In order for the HOA's lien to remain valid, the association must initiate an action to enforce the lien within three years after the last installment of the assessment becomes due. (Minn. Stat. § 515B.3-116(d)).
If you're behind in assessments and facing an HOA foreclosure in Minnesota, consider consulting with a local attorney to discuss all legal options available in your particular circumstances.