Missouri HOA and COA Foreclosures

If your home is part of a condominium owners' association (COA) or homeowners' association (HOA) in Missouri and you fall behind in assessments:

• The COA or HOA can usually get a lien on your home if you become delinquent in paying the assessments.
• After you default on the assessments, the COA or HOA may foreclose.
• Lien priority determines what happens to other liens, like a mortgage, if a COA or HOA lien is foreclosed.

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.

How COA or HOA Assessments Work, Generally

When you buy a single-family home, townhome, or condominium in a planned community with covenants, you'll most likely pay fees and assessments, often collectively called "assessments," to a COA or HOA. If you fall behind in the assessments, the association will likely initially try to collect the debt using traditional methods. For instance, the association will probably call you and send letters.

But if those tactics don't get you to pay up, the association might try other ways to collect from you. The association could take away your privileges to use the common facilities or file a lawsuit for a money judgment against you.

Based on the association's Declaration of Condominium or Declaration of Covenants, Conditions, and Restrictions (CC&Rs) and state law, most COAs and HOAs also have the power to get a lien on your property if you become delinquent in assessments. Once you fall behind in payments, a lien will usually automatically attach to your property. Sometimes, 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.

An assessments lien clouds the title to the property, hindering your ability to sell or refinance the home. In addition, the property can also be foreclosed to force a sale to a new owner—even if the property has a mortgage.

COA and HOA Laws in Missouri

Different sets of state laws often govern HOAs in subdivision communities and COAs. In Missouri, the Uniform Condominium Act (Mo. Rev. Stat. § 448.1-101 through 448.4-120) applies to condominiums created after September 28, 1993. The provisions discussed in this article also apply to condominiums created before this date.

HOAs in Missouri are often incorporated as nonprofit corporations and are subject to the state statutes that govern such corporations. Missouri's Nonprofit Corporation Law is in Chapter 355 of the Missouri Revised Statutes.

Also, the policies regarding the operation of the HOA, including those regarding assessments liens, can be found in the association's governing documents, like the Declaration of CC&Rs and bylaws. The Declaration is a publicly-recorded document, and you should have received copies of this document when you purchased your property.

COA Liens in Missouri

In Missouri, a COA is entitled to a lien for assessments from the time the assessments are due. If an assessment is payable in installments, the full amount of the assessment is a lien from the time the first installment becomes due. (Mo. Rev. Stat. § 448.3-116(1)).

The recording of the condo declaration constitutes record notice of the lien's existence. (Mo. Rev. Stat. § 448.3-116(4)). So, the COA doesn't have to record a claim of lien for it to be effective. (In some states, COAs have to record their liens.)

HOA Liens in Missouri

If you're part of an HOA in Missouri, check the association's governing documents to learn about the association's right to get a lien on your home if you don't pay the assessments.

Charges a COA or HOA May Include in the Lien

State law and the COA or HOA's governing documents will usually set out the type of charges an association may include in the lien.

Charges a COA May Include In the Lien

In Missouri, unless the declaration provides otherwise, a COA is permitted to include the following charges in its lien:

• past-due assessments
• late charges
• other fees and charges (like for preparing and recording amendments to the declaration or statements of unpaid assessments) (Mo. Rev. Stat. § 448.3-102(12))
• fines for violations of the declaration, bylaws, and rules and regulations of the association (after the COA gives the homeowner notice and an opportunity to be heard) (Mo. Rev. Stat. § 448.3-102(11)), and
• interest. (Mo. Rev. Stat. § 448.3-116(1)).

If you make a written request, the COA must provide you with a statement setting forth the amount of unpaid assessments within ten business days after it receives your request. (Mo. Rev. Stat. § 448.3-116(8)).

Charges an HOA May Include In the Lien

To find out which charges a Missouri HOA may include in its lien, check the association's governing documents, like the CC&Rs.

COA and HOA Lien Foreclosures in Missouri

Once the association has a lien, the COA or HOA may foreclose.

COA Foreclosures in Missouri

In Missouri, a COA's lien may be foreclosed in the same manner as a mortgage on real estate by filing a lawsuit in court. It may also be foreclosed by power of sale (a typical Missouri nonjudicial foreclosure), which happens outside of court. (Mo. Rev. Stat. § 448.3-116(1)).

A COA must start the foreclosure within three years after the full amount of the assessments becomes due; otherwise, the lien is extinguished (eliminated), and it loses the right to foreclose. (Mo. Rev. Stat. § 448.3-116(5)).

HOA Foreclosures in Missouri

To find out about an HOA's right to foreclose if you become delinquent in paying the assessments, read the association's CC&Rs.

COA or HOA Liens and Your Mortgage

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.

What Is Lien 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.

Priority of COA Liens

In Missouri, a COA lien is generally prior to all other liens. But certain other liens, including the following, have priority over a COA lien:

• liens and encumbrances recorded before the COA records its condo declaration
• any mortgage or deed of trust securing a purchase money loan for the unit recorded prior to August 28, 2014
• liens for real estate taxes and other governmental assessments or charges, and
• a mortgage or deed of trust recorded before the date on which the assessment sought to be enforced became delinquent. (Mo. Rev. Stat. § 448.3-116(2)).

But under Missouri law, six months' worth of common expense assessments based on the periodic budget the COA adopted get super-lien status. (Mo. Rev. Stat. § 448.3-116(2)).

Priority of HOA Liens

Missouri law doesn't cover the priority of HOA liens. So, to find out the priority of an HOA lien, read the association's governing documents. HOA liens are usually subordinate to a first lien deed of trust, but not always.

Talk to a Lawyer If You're Facing a COA or HOA Foreclosure

If you're facing a COA or HOA foreclosure in Missouri, 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.