If you live in a planned development, you’re probably part of a homeowners' association (HOA) or condominium owners’ association (COA). The HOA or COA is typically a nonprofit corporation responsible for managing and maintaining the community. The association has a lot of power over the residences and homeowners in a planned community. It creates and enforces the rules of the community, as well as determines how much members have to pay in dues and assessments (collectively referred to as “assessments”).
Residents who live in this kind of a community setting—whether it’s a condominium, townhouse, or single-family home—in New Mexico usually have to pay assessments to their HOA or COA. If you fall behind in those payments, in most cases, the HOA or COA can get a lien on your home that could lead to a foreclosure.
Read on to learn about HOA and COA foreclosures and related laws in New Mexico.
The Homeowner Association Act (N.M. Stat. Ann. §§ 47-7E-1 through 47-7E-14 § 47-16-1 to 47-16-14) governs HOA activities in New Mexico, while the Condominium Act (N.M. Stat. Ann. §§ 47-7A-1 through 47-7D-20) applies to all condominiums created after 1982. (The state's older Building Unit Ownership Act found at §§ 47-7-1 through 47-7-28 covers older condominiums unless the association’s board passes a resolution subjecting the development to the newer Condominium Act.)
This article focuses on the Homeowner Association Act and the Condominium Act. The two sets of laws are very similar.
Most HOAs and COAs have the power to place a lien on your home if you become delinquent in paying the assessments. Once the homeowner becomes delinquent on the assessments, a lien will usually automatically attach to the property.
In New Mexico, an HOA or COA is entitled to a lien for any assessment due or fines imposed against the owner from the time the assessment or fine becomes due. If an assessment is payable in installments, the full amount of the assessment constitutes a lien from the time the first installment becomes due. (N.M. Stat. Ann. § 47-16-6(B), § 47-7C-16(A)).
The recording of the instruments that create the common interest community or give the association the authority to impose assessments—like the 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. (N.M. Stat. Ann. § 47-16-6(C), § 47-7C-16(C)). (In some states, however, the HOA or COA has to record the lien for it to be effective.)
Lien priority determines what happens to other liens, mortgages, and lines of credit if an HOA or COA lien is foreclosed. (To learn more about lien priority and its importance in HOA foreclosures, see What happens to my mortgages if the HOA forecloses on its lien?)
The COA governing documents will set forth which liens take priority over a COA lien. (N.M. Stat. Ann. § 47-7C-16(H)). Likewise, to find out the priority of an HOA lien, check the association’s governing documents.
State law and the HOA or COA’s governing documents will usually set out the type of charges that may be included in the lien. In New Mexico, a COA is permitted to include the following in its lien, unless the governing documents provide otherwise:
To find out which particular charges a New Mexico HOA may include in its lien, check the HOA's governing documents.
If you make a written request, the HOA or COA must provide you with a statement setting forth the amount of the unpaid assessments against your home within ten business days after it receives your request. (N.M. Stat. Ann. § 47-16-6(D), § 47-7C-16(G)).
If you default on the assessments, the HOA or COA 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 mortgage payments.
Under New Mexico law, an association's lien may be foreclosed in the same way as a mortgage on real estate. Because in New Mexico mortgages must be foreclosed through the court, this means that an HOA or COA must judicially foreclose an assessments lien. (N.M. Stat. Ann. § 47-16-6(B), § 47-7C-16(A)). This means the association will file a lawsuit to begin the foreclosure. (Learn more about general foreclosure laws and procedures in New Mexico.)
A COA must initiate the foreclosure within three years after the full amount of the assessments becomes due or the else the lien is extinguished. (N.M. Stat. Ann. § 47-7C-16(D)). This is called the statute of limitations.
If you’re behind in assessments and facing an HOA or COA foreclosure in New Mexico, consider consulting with a local attorney to discuss all legal options available in your particular circumstances.