If you don't pay your homeowners' association (HOA) dues or assessments, the HOA can foreclose on your home. But even if you lose your home to an HOA foreclosure, some states give you the opportunity to get the property back after the foreclosure sale. This opportunity to reclaim the home is called the "right of redemption."
Read on to learn more about the right of redemption following an HOA foreclosure.
A redemption period is a specific amount of time that some homeowners get after a foreclosure during which they can buy back, or "redeem," their property from the entity or person that bought it at a foreclosure sale.
Some states give homeowners a right of redemption following a foreclosure by an HOA.
In California, for example, if an HOA forecloses using a nonjudicial process, the foreclosure is subject to a 90-day right of redemption after the sale. (Cal. Civ. Code § 5715).
Texas law provides a 180-day right of redemption from date the HOA mails written notice of the sale to the homeowner. (Tex. Prop. Code Ann. § 209.011). With a condominium, the right of redemption is 90 days. (Tex. Prop. Code Ann. § 82.113).
During the redemption period, the purchaser of the property may not transfer ownership of the property. This restriction is because the highest bidder at the foreclosure sale—which might be either the HOA or a third party—takes ownership of the property subject to the owner’s right of redemption.
Some other states have redemption periods after an HOA foreclosure as well. (Talk to a local attorney to find out about the laws in your state.)
And even if your state law doesn't provide a specific right of redemption after an HOA foreclosure specifically, your state might have another law allowing a redemption period following the foreclosure of a mortgage lien, which could apply to an HOA foreclosure as well.
The bottom line is that if you lose your home to an HOA foreclosure and would like to redeem the property, state law might provide you with a chance to do so. Foreclosures by HOAs for small amounts of unpaid dues do occur and redeeming the property can be a good way to get your home back.
In most cases, to redeem the property following the foreclosure sale, the homeowner must pay:
Sometimes, under state law, the redeemer must pay other allowable charges as well. For example, in California, if a homeowner wishes to exercise the right of redemption, the redemption price will include any repair costs the purchaser paid that were reasonably necessary for the preservation of the property. (Barry v. OC Residential Properties, LLC, 194 Cal.App.4th 861 (2011)). The buyer at the foreclosure sale may pay for maintenance and repair work if:
Then, if the homeowner chooses to redeem the property, the redeeming homeowner must reimburse the purchaser for those expenses.
To find out if your state has a law that provides a redemption period following a foreclosure by an HOA, talk with an attorney.
An attorney can also tell you about all legal options available in your particular circumstances, like potentially fighting the foreclosure in court, if you're facing a foreclosure by an HOA.