If your home is part of a condominium owners' association (COA) or homeowners' association (HOA) in New Hampshire and you fall behind in assessments:
If the COA or HOA initiates a foreclosure, you might have a defense to the action, such as the association charged you too much, assessed 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.
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.
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. The lien is extinguished if the COA doesn't provide the statement within this period. A COA can 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)).
Read the association's governing documents to learn about an HOA's right to foreclose on your home if you fall behind in paying the assessments.
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 determine an HOA lien's priority, 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.