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 condominium owners' association (COA) or homeowners' association (HOA). If you fall behind in the assessments, the association will likely first 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 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 COAs and HOAs 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.
If your home is part of a COA or HOA and you fall behind in assessments in New Hampshire:
If the COA or HOA initiates a foreclosure, you might have a defense to the action, such as the association charged you too much, charged you unreasonable fees, or failed to follow state laws. Or you might be able to negotiate a way to get caught up on the overdue amounts and save your home. For example, you might be able to pay off the entire delinquency, negotiate a reduced payoff amount, or enter into a repayment plan.
The Condominium Act (Chapter 356-B of the New Hampshire Statutes) governs most COAs in New Hampshire.
HOAs in New Hampshire are often incorporated as nonprofit corporations and are subject to the laws that govern such corporations. Also, you can find the policies regarding the operation of the HOA in the association's governing documents, like the Declaration of Covenants, Conditions, and Restrictions (CC&Rs).
Based on the association's CC&Rs and state law, a COA or HOA can usually get a lien on a property if the homeowner is delinquent in paying the assessments. Once a homeowner becomes overdue on the assessments, a lien will usually automatically attach to the home. 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 New Hampshire, a COA is entitled to a lien on a condominium unit for unpaid assessments. The COA must perfect its lien by recording a memorandum in the county records within six months after the assessment becomes due. (N.H. Rev. Stat. Ann. § 356-B:46(III)).
If you make a written request to the COA, the association must provide you with a statement of the amount due within ten business days after receiving the request. If the COA doesn't provide the statement within this period, the lien is extinguished. A COA is permitted to charge up to $10 for providing the statement. (N.H. Rev. Stat. Ann. § 356-B:46(VIII)).
If you're part of an HOA, check the association's governing documents to learn about the HOA's right to place a lien on your home if you fall behind in the assessments.
Once a COA or HOA has a lien, it may foreclose.
A COA must initiate its action to enforce the lien, like by starting a foreclosure, within six years after the lien memorandum is recorded. (N.H. Rev. Stat. Ann. § 356-B:46(IV)).
To learn about an HOA's right to foreclose on your home if you fall behind 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.
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.
New Hampshire law provides that once a COA lien is perfected it is prior to all other liens, except for:
Under certain circumstances, a lien for delinquent assessments has priority over even a lender's first mortgage. This type of lien is called a "super lien." In New Hampshire, six months' worth of delinquent common assessments, plus attorneys' fees and collection costs, have super-lien status over first mortgages recorded on or after January 1, 2011—so long as the association sends notice to the condo owner and the lender. (N.H. Rev. Stat. Ann. § 356-B:46(I)(c)).
To find out the priority of an HOA lien, check the association's governing documents.
If you're facing a COA or HOA foreclosure in New Hampshire, consider consulting with a foreclosure attorney to learn more about how the law applies to your situation and to discuss all legal options available in your particular circumstances.