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 homeowners' association (HOA) or condominium owners' association (COA). 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 HOAs and COAs 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 an HOA or COA and you fall behind in assessments in Oklahoma:
If the HOA or COA initiates a foreclosure, you might have a defense to the action, such as the association charged you too much, imposed 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 Real Estate Development Act (Okla. Stat. tit. 60, §§ 851 through 858) governs Oklahoma owners' associations in general, and Oklahoma's condominium law is primarily contained in the Unit Ownership Estate Act (Okla. Stat. tit. 60, §§ 501 through 530). If an HOA or COA is organized as a not-for-profit corporation, like most Oklahoma associations are, it will be governed by the Oklahoma General Corporation Act (Okla. Stat. tit. 18, chapter 22).
HOAs and COAs are also controlled by their governing documents, which normally include a Declaration of Covenants, Conditions, and Restrictions (CC&Rs) or Declaration of Condominium.
Based on the association's CC&Rs and state law, an HOA or COA 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.
An association must inform homeowners in writing when they become a member about the rules, restrictions, and the amounts they must pay—or potentially pay—to the association. Otherwise, the association isn't entitled to a lien for unpaid assessments. (Okla. Stat. tit. 60, § 852(C)).
Under Oklahoma law, a COA is entitled to include all sums the council of unit owners assesses for the share of common expenses chargeable to the unit in its lien. (Okla. Stat. tit. 60, § 524(a)). The governing documents might permit other types of charges as well.
For HOAs, typically, the association's governing documents will describe any charges that may be included in the lien. To find out which charges an HOA in Oklahoma may include in its lien, check the association's governing documents.
Once an association has a lien on the property, the HOA or COA may foreclose. (Okla. Stat. tit. 60, § 524(b), § 852(C)).
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.
Based on Oklahoma law, a COA's lien is prior to all other liens, except for:
To find out the priority of an HOA lien in Oklahoma, check the association's governing documents. Often, an HOA's CC&Rs will state that a lender's first mortgage or deed of trust is superior to an HOA lien.
If you're facing a COA or HOA foreclosure in Oklahoma, 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.