Tennessee HOA and COA Foreclosures

If you default on HOA or COA payments in Tennessee, the association could foreclose on your home.

Residents who live in planned community setting—whether it’s a condominium, townhouse, or single-family home—in Ohio usually have to pay dues and assessments (collectively referred to as “assessments”) to a condominium association (COA) or homeowners’ association (HOA). If you fall behind in those payments, in most cases, the COA or HOA can get a lien on your home that could lead to a foreclosure.

Read on to learn about COA and HOA foreclosures and related laws in Tennessee.

Finding Tennessee’s COA and HOA Lien Laws

The Tennessee Condominium Act of 2008 (Tenn. Code Ann. §§ 66-27-201 through 66-27-507) applies to all condominiums created after January 1, 2009, and the provisions discussed in this article also apply to condos created before this date with regard to events or circumstances that occur after this date. Tennessee’s Horizontal Property Act (Tenn. Code Ann. §§ 66-27-101 through 66-27-123) governs condos created before 2008. A COA’s governing documents, such as a Declaration of Condominium, also create rules for the community.

An HOA’s governing documents, which include the Declaration of Covenants, Conditions, and Restrictions (CC&Rs) and bylaws, will usually contain specific information regarding assessments liens.

How COA and HOA Liens Work

Generally, a COA or HOA has the power to place a lien on your property if you become delinquent in paying the assessments.

COA Liens

In Tennessee, a COA is entitled to a lien for assessments or fines from the time they became due. If an assessment is payable in installments, the lien amount is equal to the full amount of the assessment from the time the first installment became due. (Tenn. Code Ann. § 66-27-415(a)(1),(4)).

The recording of the COA’s governing documents constitutes record notice of the lien. The lien is perfected (made effective) by recording it in the county records. (Tenn. Code Ann. § 66-27-415(d)).

HOA Liens

If you’re part of an HOA, check the CC&Rs to learn about the association’s right to place a lien on your home if you don’t pay the assessments.

Charges the COA or HOA May Include in the Lien

State law and the COA or HOA’s governing documents will usually set out the type of charges that may be included in the lien.

In Tennessee, unless the declaration provides otherwise, a COA is permitted to include charges like the following in its lien:

  • past-due assessments
  • late charges
  • reasonable fines for violations of the declaration, bylaws, rules, and regulations (after giving the owner notice and an opportunity to be heard)
  • certain fees (like for the preparation and recordation of amendments to the declaration), and
  • interest. (Tenn. Code Ann. § 66-27-415(a)(4)).

To find out which charges a Tennessee HOA may include in its lien, check the association's governing documents.

Lien Priority

Lien priority determines what happens to other liens, like mortgages and judgment liens, if a COA or HOA lien is foreclosed.

Priority of COA Liens

In Tennessee, a COA lien is prior to all other liens, except for:

  • liens and encumbrances recorded before the COA records the condo declaration
  • real estate tax liens (and other governmental assessments or charges), and
  • a first or other contemporaneous mortgage or deed of trust on the condo that was recorded before the delinquency date of the assessment. (Tenn. Code Ann. § 66-27-415(b)).

Under certain circumstances, though, a COA lien for delinquent assessments gets priority over a lender’s first mortgage or deed of trust. This type of lien is called a “super lien.” In Tennessee, six months’ worth of delinquent common expense assessments have super-lien status, but not more than 1% of the maximum principal indebtedness of a lien secured by the first mortgage or deed of trust. (Tenn. Code Ann. § 66-27-415(b)(2)).

However, under Tennessee law, a COA foreclosure can’t wipe out a first mortgage or deed of trust in a foreclosure—even if it has a super lien. (Tenn. Code Ann. § 66-27-415(b)(2)). The COA has only a payment priority interest, which means it has the right to receive six months’ worth of delinquent common expense assessments out of the proceeds of a foreclosure sale.

Priority of HOA Liens

HOA CC&Rs often address lien priority, and typically state that HOA assessments and liens are subordinate to a first mortgage or deed of trust. To find out the priority of an HOA lien in Tennessee, check your association’s governing documents. (To learn more about lien priority and HOA foreclosures, see What happens to my mortgages if the HOA forecloses on its lien?)

COA and HOA Foreclosures in Tennessee

If you default on the assessments, the COA or HOA 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 current on your home loan payments.

COA Foreclosures

In Tennessee, a COA lien may be foreclosed nonjudicially if permitted by the COA’s governing documents and so long as the COA gives proper notice of the foreclosure to the unit owner. (Tenn. Code Ann. § 66-27-415(a)(1)).

Statute of limitations. A COA must start the foreclosure within six years after the full amount of the assessments becomes due otherwise the lien is extinguished (eliminated). (Tenn. Code Ann. § 66-27-415(e)).

HOA Foreclosures

To find out about an HOA’s right to foreclose if you become delinquent in paying the assessments, read the association’s governing documents.

Talk to a Lawyer

If you’re behind in assessments and facing a COA or HOA foreclosure in Tennessee, consider consulting with a local attorney to discuss all legal options available in your particular circumstances.

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