If you own a home that’s part of a homeowners' association (HOA) and fall behind in your HOA dues or assessments, the association will likely first try to collect the debt using traditional methods. For instance, the HOA 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, like:
The HOA might even go so far as to foreclose. But if the HOA begins a foreclosure, don’t panic; you might have a defense to the action.
The HOA’s governing documents, like its Covenants, Conditions, and Restrictions (CC&Rs), and state law often set out the collection methods that the HOA can use. Some of those methods include the following:
The first thing an HOA will likely do is send you a notice demanding payment. The notice will typically include:
The HOA might also call you to warn you that you're late in your payments.
One tactic your HOA might use to coerce you to pay is to take away your right to use recreational facilities—like gyms, pools, and tennis courts—until you get caught up.
If you rent out the property to tenants, the HOA might go after your tenants seeking payment. Some HOAs require any tenants to sign an agreement promising to pay association dues if the landlord-owners don’t.
Some states allow an HOA to sue a homeowner for unpaid amounts. Often, HOAs pursue delinquent assessments in small claims court. The HOA files its lawsuit and will either get a default judgment (an automatic win because you don’t respond to the suit) or prevail in its case. Once the HOA gets a money judgment against you, it might garnish your wages or levy your bank accounts.
To garnish your wages after getting the judgment, the HOA sends documentation to your employer, typically through the local sheriff. The documents direct your employer to take a specific amount of your paycheck and send it directly to the HOA until your debt is paid off.
Alternatively, the HOA might take steps to collect directly from your bank by freezing your bank account, also called a bank account levy, attachment, or garnishment. When your bank account is frozen, you can’t withdraw money, outstanding checks won’t clear, you can’t make transfers, and you might be responsible for bank charges, like fees for having insufficient funds in your account.
HOAs typically have the power to get a lien on your home if you fall behind in your HOA dues or assessments. Sometimes, the HOA will record the lien in the county records, even though recordation isn’t always required. The lien usually automatically attaches to the property as of the date the CC&Rs were recorded, or the assessments became due.
A lien on your property probably won’t cause you an issue until you attempt to sell the home, you try to refinance your mortgage, or the HOA decides to foreclose.
If the HOA has a lien on your home, it may foreclose the lien as permitted by the CC&Rs and state law. HOAs have been known to foreclose even in cases where the homeowner is only behind by a few hundred or thousand dollars. Strangely enough, these days, your mortgage lender or servicer might be more willing than your HOA to cut you some slack if you’re late in your payments.
If your HOA begins a foreclosure, don’t panic; you might have a defense to the action, like:
To fight an HOA foreclosure, you might be able to raise one or more of these defenses.
If you're facing an HOA foreclosure, consider talking to a local foreclosure attorney to get information about potential defenses, other ways to avoid the foreclosure, and details about HOA foreclosure laws in your state.