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 that's 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”). If you fall behind in your assessments, 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 Pennsylvania.
In Pennsylvania, the Uniform Planned Community Act (68 Pa. Cons. Stat. §§ 5101 through 5414) governs HOAs, while the Uniform Condominium Act (68 Pa. Cons. Stat. §§ 3101 through 3414) applies to COAs. The two sets of laws are very similar.
Also, you can find the association's operation policies—including those regarding assessments liens—in the HOA or COA's governing documents. The governing documents include the Declaration of Covenants, Conditions, and Restrictions (CC&Rs) (or Declaration of Condominium) and the bylaws.
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 Pennsylvania, an HOA or COA has a lien for unpaid assessments from the time 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)). This means the HOA or COA doesn't have to record a claim of lien in the county records in order for it to be effective. (In some states, however, the association has to record the lien.)
State law and the HOA or COA’s governing documents will often set out the type of charges that it may include in the lien. In Pennsylvania, an HOA or COA is permitted to include the following in its lien, unless the governing documents provide otherwise:
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)).
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?)
In Pennsylvania, an HOA lien or COA lien has priority over all other liens and encumbrances, except for:
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, six months’ worth of delinquent assessments have super-lien status. (68 Pa. Cons. Stat. § 5315(b), § 3315(b)).
If you default on the assessments, HOA or COA may foreclose. A common misconception is that the association can’t foreclose if you’re current with your mortgage payments. But the association’s right to foreclose has nothing to do with whether you’re caught up on your home loan.
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)). So, the association will file a lawsuit to begin the foreclosure. (Learn more about general foreclosure laws and procedures in Pennsylvania.)
An HOA or COA must initiate the foreclosure within four years after the assessments become payable otherwise the lien is extinguished. (68 Pa. Cons. Stat. § 5315(e), § 3315(d)).
If you’re behind in assessments and facing an HOA or COA foreclosure in Pennsylvania, consider consulting with a local attorney to discuss all legal options available in your particular circumstances. (Learn about possible options to catch up—and avoid foreclosure—if you're delinquent in assessments.)