South Carolina HOA and COA Foreclosures

If your home is part of a homeowners' association (HOA) or condominium owners' association (COA) in South Carolina and you fall behind in assessments:

• The HOA or COA can usually get a lien on your home.
• The association typically can charge you for overdue assessments, late charges, fines, collection costs, interest, and attorneys' fees and costs.
• After you default on the assessments, the HOA or COA may foreclose.
• Lien priority determines what happens to other liens, like mortgages and judgment liens, if an HOA or COA lien is foreclosed.

If the HOA or COA initiates a foreclosure, you might have a defense to the action. Or you might be able to negotiate a way to get caught up on the overdue amounts and save your home.

What Is an HOA or COA Lien, and How Is It Placed on a Property for Unpaid Dues?

When you buy a single-family home, townhome, or condominium in a planned community with covenants, you'll most likely pay fees (dues) and assessments, often collectively called "assessments," to a COA or HOA. 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 Condominium or Declaration of Covenants, Conditions, and Restrictions (CC&Rs) and state law, most COAs and HOAs 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.

What Are the HOA Laws in South Carolina?

Different sets of state laws often govern HOAs in subdivision communities and COAs. The Horizontal Property Act (S.C. Code §§ 27-31-10 through 27-31-440) governs COAs in South Carolina. For decades, South Carolina didn't have laws that governed HOAs. Then, in 2018, the state passed legislation creating the South Carolina Homeowners Association Act (SCHA). (S.C. Code §§ 27-30-110 through 27-30-170).

HOAs and COAs are also controlled by their governing documents, which typically include a Declaration of CC&Rs and bylaws. The specific rules regarding assessments liens can usually be found in these governing documents. You likely received copies of the CC&Rs and bylaws when you purchased your property.

Under the SCHA, to be enforceable, all governing documents for an HOA must be recorded in the public records of the county where the property is located. The HOA's rules, regulations, and amendments to the rules and regulations also have to be recorded. (S.C. Code § 27-30-130 (2024).)

How Do HOA and COA Liens Work in South Carolina?

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.

Charges an HOA May Include in the Lien

Typically, an HOA is permitted to include the following in its lien:

• past-due assessments
• late charges
• fines
• collection costs
• interest, and
• attorneys' fees and costs.

To determine which charges a particular South Carolina HOA may include in its lien, check the association's CC&Rs or other governing documents. Under the SCHA, local magistrate courts have concurrent jurisdiction, presumably with the Circuit Court, to adjudicate monetary disputes of up to $7,500 between homeowners and HOAs. (S.C. Code § 27-30-160 (2024).)

Charges a COA May Include in the Lien

In South Carolina, a COA lien consists of all unpaid sums for common expenses. (S.C. Code § 27-31-210(a) (2024).)

What Is the HOA/COA Foreclosure Process in South Carolina?

State laws often place particular due process requirements on HOAs and COAs regarding how and when an association can foreclose an assessments lien.

COA Foreclosure Process in South Carolina

As with a regular mortgage foreclosure in South Carolina, a COA lien may foreclose its lien judicially, by filing a lawsuit. (S.C. Code § 27-31-210 (a) (2024).)

HOA Foreclosures in South Carolina

An HOA's foreclosure rights come from the governing documents of the association. Read the association's governing documents to find out the process that the HOA must follow to foreclose a lien for unpaid assessments.

How Can Homeowners Challenge an HOA or COA Foreclosure?

If an HOA or COA initiates a foreclosure, you might have a defense to the foreclosure, such as the HOA charged too much or charged unreasonable fees, the CC&Rs don't authorize the HOA's charges, the HOA failed to follow state laws, or others.

What Are the Consequences for Homeowners After an HOA or COA Foreclosure?

The main consequence of an HOA or COA foreclosure is that you can lose your home. Plus, a foreclosure will hurt your credit, making it more difficult (or expensive) to get credit or loans in the future.

HOA and COA Liens and Your Mortgage

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 current on your mortgage payments. 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 might adjust lien priority.

How Do HOA and COA Liens Rank in Priority Compared to Other Liens, Like Mortgages, Under South Carolina Law?

To determine an HOA lien's priority, check the association's governing documents.

A COA's lien is prior to all other liens except for:

• tax liens
• recorded mortgages, and
• other recorded liens. (S.C. Code § 27-31-210 (a) (2024).)

So, a foreclosure by an HOA or COA usually won't eliminate a mortgage because the association's lien is usually lower in priority.

How Can Homeowners Prevent an HOA or COA Foreclosure in South Carolina?

If you're facing an HOA or COA foreclosure in South Carolina, you might be able to halt the process (or avoid it altogether). You could, for example, pay off the full amount you owe or settle the debt for a lesser amount. And, again, you might have a defense to a foreclosure.

What Legal Resources Are Available to South Carolina Homeowners Facing HOA or COA Foreclosure?

To learn more about HOA laws in South Carolina, visit the South Carolina Department of Consumer Affairs website.

You can file a complaint about your HOA with the South Carolina Homeowner's Association Ombudsman with the South Carolina Department of Consumer Affairs.

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

If you're facing an HOA or COA foreclosure in South Carolina, consider consulting with a foreclosure attorney to learn more about state laws, how they apply to your situation, and to discuss all legal options available in your particular circumstances.