If you live in a house, condo, or townhome that is part of a common interest community, you are most likely responsible for paying dues and assessments to the homeowners’ association (HOA) or condominium association (COA). If you don’t pay, in most cases the HOA or COA can get a lien on your property that could lead to a foreclosure.
Read on to learn about the particular requirements for HOA and COA foreclosures in Oregon.
In Oregon, an HOA gets its authority to place a lien through the Planned Community Act (Or. Rev. Stat. § 94.550 to § 94.783), while a COA gets its authority through the state's Condominium Act (Or. Rev. Stat. § 100.105, et seq.) The two sets of laws are very similar, though there is one major distinction regarding the lien priority of HOA and COA liens.
Once you fall behind in paying your HOA or COA monthly dues and/or any special assessments (collectively referred to as assessments), almost all HOAs and COAs have the power to place a lien on the property.
In Oregon, the recording of the HOA or COA Declaration of Covenants, Conditions, and Restrictions (often called CC&Rs or the declaration) constitutes record notice and perfection of the lien. However, the lien must be recorded if the association wishes to proceed with a foreclosure of the lien (Or. Rev. Stat. § 94.709(2), Or. Rev. Stat § 100.450(2)).
In Oregon, an HOA lien for unpaid assessments is prior to all other liens except:
In Oregon, a COA lien for unpaid assessments is prior to all other liens except for the following:
Tax and assessment liens.
A first mortgage or trust deed of record unless
COA super liens. In addition, the COA may take certain steps to give the assessments lien “super priority” over a first mortgage or trust deed. For example, the COA must give the lender 90 days written notice that the owner of the unit is in default in paying the assessments, among other things (Or. Rev. Stat § 100.450(7)). (Learn more about super priority in Nolo’s article Homeowners’ Association Super Liens.)
Oregon law sets out the charges that may be included in the HOA or COA assessments lien (Or. Rev. Stat. § 94.709(1) and (5), Or. Rev. Stat § 100.450(1)and (5)).
If you default on the assessments, the HOA or COA can foreclose. A common misconception is that the association cannot foreclose if you are current with your mortgage payments. However, the association’s right to foreclose has nothing to do with whether you are current on your mortgage payments. (Learn more about HOA liens and foreclosure.)
In Oregon, the HOA or COA must foreclose its lien judicially, which means the lender must file a lawsuit in court (Or. Rev. Stat. § 94.709(4), Or. Rev. Stat § 100.450(4)). This differs from a typical residential foreclosure in Oregon. Oregon home loans are usually secured by a deed of trust, rather than a mortgage, so residential foreclosures are often nonjudicial. (Though, in 2012, lenders switched to judicial foreclosures for various reasons that are no longer applicable. Learn more about judicial foreclosures, nonjudicial foreclosures, and foreclosure laws and procedures in Oregon.)
In order for the lien to remain valid, the HOA or COA must initiate an action to enforce the lien within six years from the date the assessment is due (Or. Rev. Stat § 94.709(4) and Or. Rev. Stat § 100.450(4)). This is called the statute of limitations.
If you are facing an HOA or COA foreclosure, you should consult with an attorney licensed in Oregon to discuss all legal options available in your particular circumstances. (See our HOA Foreclosure topic page for articles on HOAs, possible options to catch up if you are delinquent in payments, how bankruptcy can help discharge dues, HOA super liens, and more.)