Pennsylvania HOA and COA Foreclosures

In Pennsylvania, if your home is part of a homeowners' association (HOA) or condominium owners' association (COA) and you fall behind in assessments:

• The HOA or COA can get a lien on your home.
• The association typically can charge you for overdue assessments, late charges, interest, fines, various fees, and collection costs.
• The association might choose to foreclose its lien.
• Lien priority determines what happens to other liens, like a mortgage, if an HOA or COA lien is foreclosed.

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.

How Do HOA and COA Assessments Work?

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 an HOA or COA. 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 Covenants, Conditions, and Restrictions (CC&Rs) or Declaration of Condominium and state law, most HOAs and COAs 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.

HOA and COA Liens in Pennsylvania

In Pennsylvania, an HOA or COA has a lien for unpaid assessments from when the assessment or fine becomes due. If an assessment is payable in installments, the entire outstanding balance of the assessment becomes effective as a lien from the due date of the delinquent installment. (68 Pa. Cons. Stat. § 5315(a), § 3315(a)).

The recording of the HOA or COA's declaration counts as notice of the lien. (68 Pa. Cons. Stat. § 5315(d), § 3315(c)). So, the HOA or COA doesn't have to record a claim of lien in the county records for it to be effective.

Charges an HOA or COA May Include in a Lien

In Pennsylvania, an HOA or COA is permitted to include the following in its lien unless the governing documents provide otherwise:

• past-due assessments
• late charges
• collection costs and expenses
• fines for violations of the declaration, bylaws, and rules and regulations of the association
• interest, although it can't be higher than 15% per year (68 Pa. Cons. Stat. § 5314(b), § 3314(b)), and
• other charges, like for the preparation and recording of amendments to the declaration or statements of unpaid assessments. (68 Pa. Cons. Stat. § 5315(a), § 3315(a)).

How to Get a Statement of Unpaid Assessments from an HOA or COA

If you make a written request to the HOA or COA, the association must provide you with a statement of the amount of unpaid assessments within ten business days after receiving the request. (68 Pa. Cons. Stat. § 5315(h), § 3315(g)).

Contesting an HOA or COA Lien

Pennsylvania law requires HOAs and COAs established after July 3, 2018, to adopt bylaws governing an alternative dispute resolution (ADR) process. (Associations established on or before July 3, 2018, may adopt bylaws covering an ADR process but aren't required to do so.) The bylaws must set up an ADR procedure, like mediation or arbitration, for disputes between the homeowner and the association. So, if you want to contest an HOA or COA lien, an ADR process might be available.

Under the law, the association's ADR process is limited to disputes where all parties agree to participate. The costs and fees associated with ADR, excluding attorneys' fees, will be assessed equally against all parties to a dispute. Notwithstanding Pennsylvania's laws regarding association ADR requirements, the homeowner may still pursue a private cause of action or seek other relief against an association. (68 Pa. Cons. Stat. § 5321, § 3321).

What Happens If You Don't Pay HOA or COA Fees in Pennsylvania? Possibly Foreclosure

In Pennsylvania, an HOA or COA may foreclose its lien in the same way that a mortgage on real property is foreclosed. (68 Pa. Cons. Stat. § 5315(a), § 3315(a)).

Statute of Limitations

An HOA or COA must initiate the foreclosure (or a suit for a money judgment) within four years after the assessments become payable. Otherwise, the lien is extinguished. (68 Pa. Cons. Stat. § 5315(e), § 3315(d)).

HOA and COA Liens and Your Mortgage

A common misconception is that an HOA or COA 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 up to date on your mortgage. Instead, lien priority determines what happens in a foreclosure.

What Is Lien Priority?

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 can adjust lien priority.

HOA and COA Lien Priority in Pennsylvania

In Pennsylvania, an HOA lien or COA lien has priority over all other liens and encumbrances, except for:

• liens recorded before the association records its declaration
• first mortgages and deeds of trust recorded before the due date of the assessment
• judgments for debts secured by first mortgages and deeds of trust, and
• real estate tax liens and other governmental assessments. (68 Pa. Cons. Stat. § 5315(b), § 3315(b)).

Is Pennsylvania a Super Lien State?

Under certain circumstances, an HOA or COA lien has priority over a lender's first mortgage or deed of trust. This type of lien is called a "super lien."

In Pennsylvania, an HOA or COA gets a super lien for the assessments that came due during the six months immediately preceding the foreclosure sale, but only to the extent that the six months' unpaid assessments are paid out of the proceeds of the sale. (68 Pa. Cons. Stat. § 5315(b), § 3315(b)).

Talk to a Lawyer If You're Facing an HOA or COA Foreclosure

If you're facing an HOA or COA foreclosure in Pennsylvania, consider consulting with a foreclosure attorney to discuss all legal options available in your particular circumstances.