If your home is part of a condominium owners' association (COA) or homeowners' association (HOA) in the District of Columbia and you fall behind in assessments:
If the COA or HOA initiates a foreclosure, you might have a defense to the action, such as the association charged you too much, imposed unreasonable fees, or failed to follow state laws.
Or you might be able to negotiate a way to get caught up on the overdue amounts and save your home. For example, you might be able to pay off the entire delinquency, negotiate a reduced payoff amount, or enter into a repayment plan.
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 a COA or HOA. If you fall behind in the assessments, the association will likely initially 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 might try other ways to collect from you. The association could take away your privileges to use the common facilities or file a lawsuit for a money judgment against you.
Based on the association's Declaration of Condominium or Declaration of Covenants, Conditions, and Restrictions (CC&Rs) and state law, most COAs and HOAs also have the power to get a lien on your property if you become delinquent in assessments. Once you fall behind in payments, a lien will usually automatically attach to your property. Sometimes, the association will record its lien with the county recorder to provide public notice that the lien exists, regardless of whether state law requires recording.
An assessments lien clouds the title to the property, hindering your ability to sell or refinance the home. In addition, the property can also be foreclosed to force a sale to a new owner—even if the property has a mortgage.
Under D.C. law, a COA is entitled to a lien on a condo for any unpaid assessments from the time the assessment becomes due. If an assessment is payable in installments, the full amount of the assessment is a lien from the time the first installment becomes due and payable. (D.C. Code § 42-1903.13(a)).
The recording of the COA's governing documents in the county records constitutes record notice and perfection of the lien. The COA doesn't have to record its lien in the county records for it to be effective. (D.C. Code § 42-1903.13(b)).
If you make a written request to the COA, the association must provide you with a statement of the amount of unpaid assessments within ten days after receiving your request. The lien is extinguished if the COA doesn't provide the statement within this period. (D.C. Code § 42-1903.13(h)).
If you're part of an HOA, check the association's governing documents, like the CC&Rs, to learn about the association's right to place a lien on your home if you don't pay the assessments.
State law and the COA or HOA's governing documents will usually set out the type of charges an association may impose in addition to the past-due assessments. In the District of Columbia, a COA may impose:
To find out which charges an HOA in the District of Columbia may include in its lien, check the association's governing documents.
Once a COA or HOA has a lien, it may foreclose.
In the District of Columbia, a COA may foreclose its lien nonjudicially unless the COA's governing documents prohibit nonjudicial foreclosures. (D.C. Code § 42-1903.13(c)(1)). The association can't hold a foreclosure sale until at least 31 days after it records a notice in the land records and sends the notice to the unit owner. (D.C. Code § 42-1903.13(c)(4)).
In addition, the notice must be published in a newspaper of general circulation in the District of Columbia on at least three separate days during the 15-day period before the sale date. (D.C. Code § 42-1903.13(c)(5)).
Right to cure. A condo owner has the right to cure a default in assessment payments at any time before the foreclosure sale by making full payment of past due assessments, plus any late charge, interest due, and reasonable attorneys' fees and costs incurred in connection with the enforcement of the lien. (D.C. Code § 42-1903.13(c)(2)).
Statute of limitations for COA liens. Unless the COA starts the foreclosure—or sues the condo owner personally for payment—within three years from the date the assessment became due, the lien will lapse and have no effect. (D.C. Code § 42-1903.13(e)).
Read the association's governing documents to find out the specific notice and foreclosure procedures that the HOA must follow if you fall behind in payments.
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 paid up on your mortgage. Instead, lien priority determines what happens in a foreclosure.
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 other liens 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.
In Washington, D.C., COA liens are generally prior to all other liens and encumbrances, except for:
But in the District of Columbia, a COA is entitled to a super lien over a first mortgage or first deed of trust recorded before the date on which the assessment became delinquent in an amount equal to six months' worth of common expense assessments. (D.C. Code § 42-1903.13(a)(2)).
To find out the priority of an HOA lien in the District of Columbia, check the association's governing documents. Often, an HOA's CC&Rs will state that a lender's first mortgage or deed of trust is superior to an HOA lien.
If you're facing a COA or HOA foreclosure in the District of Columbia, consider consulting with a foreclosure attorney to learn more about how the law applies to your situation and to discuss all legal options available in your particular circumstances.