If you don't pay homeowner's association (HOA) dues or assessments, the HOA can foreclose on your home. If you lose your home in an HOA foreclosure, some states give you the opportunity to repurchase your property following the foreclosure sale. This is called the right of redemption. Read on to learn more about reacquiring your property following an HOA foreclosure. (To learn more about HOA dues and assessments, HOA liens, and HOA foreclosures, visit our HOA Foreclosures topic area.)
A redemption period is a specific time period given to homeowners following foreclosure during which they can buy back, or “redeem,” their property from the entity or person that purchased it at the foreclosure sale. (Learn more about redemption periods.)
Some states give homeowners the specific right of redemption following a foreclosure by an HOA. In California, for example, if an HOA forecloses on a homeowner using a nonjudicial process, the foreclosure is subject to a 90-day right of redemption after the sale (Cal. Civ. Code § 5715). (Generally, there is no redemption period following the sale in a nonjudicial foreclosure of a deed of trust in California. Learn more about mortgage foreclosure proceedings in California.)
In Texas, there is 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 is because the highest bidder at the foreclosure sale (which may be either the HOA or a third party) takes ownership of the property subject to the owner’s right of redemption.
Even if your state does not provide a specific right of redemption after an HOA forecloses, there may be another state law allowing a redemption period following a mortgage foreclosure sale, which may apply to an HOA foreclosure as well.
The bottom line is that if for some reason you lose your home to an HOA foreclosure and would like to redeem the property, state law may provide you with an opportunity to do so. Foreclosures by homeowners associations 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:
Additionally, in California, if a homeowner wishes to exercise her right of redemption, the redemption price will include any repair costs paid by the purchaser that were reasonably necessary for the preservation of the property (Barry v. OC Residential Properties, LLC, 194 Cal.App.4th 861 (2011)). The purchaser 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 there is a redemption period in your state following foreclosure by an HOA, review your state’s statutes. (To learn more about how to do your own legal research, see Nolo’s Laws and Legal Research section.) You can also consult with a licensed attorney in your state to discuss all legal options available in your particular circumstances if you are facing a foreclosure by an HOA.