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.
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 bought it at the foreclosure sale.
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 might 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 doesn't provide a specific right of redemption after an HOA foreclosure, there might be another state law allowing a redemption period following a mortgage foreclosure sale, which could 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 might provide you with a chance 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:
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 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's a redemption period in your state 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.