Virginia HOA and COA Foreclosures

If your home is part of a homeowners' association (HOA) or condominium owners' association (COA) and you fall behind in assessments, Virginia HOA laws and COA laws allow the association to get a lien on your home and, in some circumstances, foreclose.

What Are the HOA and COA Laws in Virginia?

Different sets of state laws often govern HOAs in subdivision communities and COAs. The Property Owners' Association Act (Va. Code §§ 55.1-1800 and following) governs HOA activities in Virginia. The Condominium Act (Va. Code §§ 55.1-1900 and following) applies to condominiums created after July 1, 1974 (and supersedes the state's older Horizontal Property Act).

The two sets of laws are very similar regarding assessments liens, with a few minor differences.

How HOA and COA Fees (Assessments) Work

When you buy a single-family home, townhome, or condominium in a planned community with covenants, you'll most likely pay fees and assessments, often collectively called "assessments," to an HOA or COA. If you fall behind in the assessments, the association will likely first try to collect the debt using traditional methods. For instance, the association will probably call you and send letters.

But if those tactics don't get you to pay up, the association could try other ways to collect from you. The association might take away your privileges to use the common facilities or file a lawsuit for a money judgment against you.

What Is an HOA or COA Lien, and How Is It Placed on a Property for Unpaid Dues?

Based on the association's Covenants, Conditions, and Restrictions (CC&Rs) and state law, most HOAs and COAs also have the power to get a lien on your property if you become delinquent in assessments. Generally, an assessments lien automatically attaches to the property; it doesn't have to be recorded in the county records. However, some HOAs and COAs record a notice of lien anyway.

Not only will an assessments lien cloud the title to the property, hindering your ability to sell or refinance the home, but the property can also be foreclosed to force a sale to a new owner—even if the property has a mortgage on it.

How Do HOA and COA Liens Work in Virginia?

In Virginia, an HOA is entitled to a lien if you don't pay the assessments. To perfect its lien, the HOA must file a memorandum of lien in the clerk's office of the circuit court in the county or city where the development is located within 12 months from the time the first assessment became due and payable. (Va. Code § 55.1-1833 (2024).) The HOA must mail written notice to the homeowner at least ten days before filing the lien. (Va. Code § 55.1-1833 (2024).)

A COA in Virginia is also entitled to a lien if a condo owner doesn't pay the assessments. To perfect its assessments lien, the COA must record the lien in the clerk's office of the circuit court in the county or city in which the condo is located within 90 days from the time the first assessment became due and payable. (Va. Code § 55.1-1966 (2024).)

What Is the HOA and COA Foreclosure Process in Virginia?

In Virginia, an HOA or COA may foreclose its lien nonjudicially, which means the foreclosure takes place without court supervision. Judicial foreclosures of HOA and COA liens are also allowed. (Va. Code § 55.1-1833, § 55.1-1966 (2024).)

Restriction on HOA and COA Foreclosures in Virginia

An HOA or COA may foreclose if the total sum of one or more liens exceeds $5,000, excluding attorneys' fees and costs. (Va. Code § 55.1-1833, § 55.1-1966, § 8.01-463 (2024).)

What Are the Steps Involved When an HOA or COA Forecloses on a Property in Virginia?

Generally, here's how a nonjudicial foreclosure by an HOA or COA in Virginia works.

Preforeclosure Notice

As part of the foreclosure, the HOA or COA must first give notice to the homeowner or condo owner providing at least 60 days to pay the debt and, if the debt isn't paid, that the property can be sold in a foreclosure sale. The notice must also state that the owner has the right to bring a lawsuit challenging the existence of the debt or to raise another defense to the foreclosure. (Va. Code § 55.1-1833, § 55.1-1966 (2024).)

After the 60-day period expires, the association may appoint a trustee to conduct the sale. (Va. Code § 55.1-1833, § 55.1-1966 (2024).)

Publication Requirement

The HOA or COA must advertise the time, date, and place of the sale, among other things, in a newspaper once a week for four weeks. However, if the property or some portion of the property is located in a city or in a county immediately contiguous to a city, publication can be on five different days, which may be consecutive days. (Va. Code § 55.1-1833, § 55.1-1966 (2024).)

The sale is held on any day following the day of the last advertisement that is no earlier than eight days following the first advertisement nor more than 30 days following the last advertisement. (Va. Code § 55.1-1833, § 55.1-1966 (2024).)

Notice of the Sale

The HOA or COA must also mail or personally deliver a copy of the newspaper advertisement (or a notice that contains the same information) to the owner. If mailed, the advertisement or notice must be sent by certified or registered mail no less than 14 days before the sale. (Va. Code § 55.1-1833, § 55.1-1966 (2024).)

Right to Cure

The homeowner or condo owner may prevent the foreclosure sale by paying the past-due assessments, plus all expenses and costs that the HOA or COA incurred in perfecting and enforcing the lien, such as advertising costs and reasonable attorneys' fees. (Va. Code § 55.1-1833, § 55.1-1966 (2024).)

HOA Lien and COA Lien Statute of Limitations

An HOA or COA must initiate the foreclosure action or file a lawsuit to collect the debt within 120 months after the date the memorandum of lien is recorded. (Va. Code § 55.1-1833, § 55.1-1966 (2024).)

HOA and COA Liens and Your Mortgage

A common misconception is that the association can't foreclose if you're current with your mortgage payments. But an association's right to foreclose isn't dependent on whether you're up to date on your mortgage.

Instead, lien priority determines what happens to other liens, like mortgages, if an HOA or COA lien is foreclosed.

What Is Lien Priority?

The priority of liens establishes who gets paid first following a foreclosure sale and often determines whether a lienholder will get paid at all. Liens generally follow the "first in time, first in right" rule, which says that whichever lien is recorded first in the land records has higher priority than later recorded liens. A first lien has a higher priority than others and gets the first crack at the foreclosure sale proceeds.

If any proceeds are left after the first lien is paid in full, the excess proceeds go to the second lienholder until that lien is paid off, and so on. A lien with a low priority might get nothing from a foreclosure sale.

But state law or an association's governing documents might adjust lien priority.

How Do HOA and COA Liens Rank in Priority Compared to Other Liens, Like Mortgages, Under Virginia Law?

In Virginia, once the HOA or COA lien is perfected, that lien is prior to all other liens and encumbrances, except for:

• real estate tax liens
• liens and encumbrances recorded prior to the recordation of the declaration, and
• for HOA liens, sums unpaid on and owing under any mortgage or deed of trust recorded prior to the perfection of the assessments lien, and
• for COA liens, sums unpaid on any first mortgage or first deed of trust recorded prior to the perfection of the assessments lien and securing institutional lenders, such as banks. (Va. Code § 55.1-1833, § 55.1-1966 (2024).)

So, a foreclosure by an HOA or COA usually won't eliminate a first mortgage because the association's lien is normally lower in priority.

What Are the Consequences of an HOA Foreclosure?

Clearly, the most severe consequence of an HOA foreclosure is that you could lose your home. If you let a foreclosure sale happen, you'll lose ownership of the property and potentially lose any equity you've built up. In addition to losing the home, a foreclosure will damage your credit, making it more difficult to get credit or loans in the future or you might have to pay a higher interest rate to borrow money.

How Can Homeowners Prevent an HOA or COA Foreclosure in Virginia?

If you're facing an HOA or COA foreclosure in Virginia, you might be able to halt the process (or avoid it altogether). You could, for example, pay off the full amount you owe or settle the debt for a lesser amount. And, again, you might have a defense to a foreclosure.

What Legal Resources Are Available to Virginia Homeowners Facing HOA or COA Foreclosure?

In Virginia, the Office of the Common Interest Community Ombudsman helps people understand their rights and the processes available to them under the laws and regulations governing common interest communities. The office can also respond to general inquiries. (A "common interest community" can be a COA, a Property Owner Association (HOA), or a Real Estate Cooperative.)

You can also learn how to file a complaint about an HOA or COA on their website.

Talk to a Lawyer If You're Facing an HOA or COA Foreclosure in Virginia

If the HOA or COA initiates a foreclosure, you might have a defense to the action, or you might be able to negotiate a way to get caught up on the overdue amounts and save your home. Consider consulting with a foreclosure attorney to discuss all legal options available in your circumstances.