If you own a home that is part of a homeowners association (HOA) and fall behind in your HOA dues or assessments, the HOA will likely first try to collect the debt using traditional methods, such as phone calls and letters. If that doesn’t get you to pay up, the HOA will probably try other tactics and might even go so far as to foreclose on your home.
The HOA bylaws—and perhaps the 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 first thing that an HOA will likely do is send you a notice demanding payment. The HOA might call you as well to warn you that you're late in your payments.
The notice will typically include:
The HOA might offer you a payment plan. Along with—or subsequent to—the demand notice, the HOA might offer you a payment plan to get caught up on your HOA dues and assessments. Colorado law, in fact, requires HOAs to offer payment plans to homeowners who are delinquent in paying their HOA. (Learn more in HOA Laws in Colorado.)
If you agree to a payment plan, the HOA might agree to waive the late fees or penalties. (Learn more about payment plans and other options to catch up if you are delinquent in HOA dues.)
One tactic your HOA may use to coerce you to pay, is to take away your the 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. There are some HOAs that 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 and then garnish that homeowner’s wages or bank accounts.
HOAs typically have the power to place 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 as well, even though this is not always required. The lien usually automatically attaches to the property as of the date:
A lien on your property probably won’t cause you an issue until:
If the HOA has a lien on your home, it may foreclose the lien as permitted by the CC&Rs and state law. (Learn more in Nolo’s article HOA Liens & Foreclosures: An Overview.)
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 may be more willing than your HOA to cut you some slack if you are late in your payments.
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.