When you buy a single-family home, townhome, or condominium that's part of a planned community with covenants, you'll most likely pay fees and assessments, often collectively called "assessments," to a condominium owners' association (COA) or homeowners' association (HOA). 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 will probably try other ways to collect from you. The association might take away your privileges to use the common facilities or file a lawsuit to get a money judgment against you.
Most COAs and HOAs also have the power to get a lien on your property if you become delinquent in assessments. Not only will an assessments lien cloud the title to the property, which hinders 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.
If your home is part of a COA or HOA and you fall behind in assessments in Washington:
If the COA or HOA initiates a foreclosure, you might have a defense to the action, such as the association charged you too much, charged you 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.
Based on the association's CC&Rs and state law, a COA or HOA can usually get a lien on a property if the homeowner is delinquent in paying the assessments. Once a homeowner becomes overdue on the assessments, a lien will usually automatically attach to the home. In some cases, 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.
In Washington, a COA is entitled to a lien on a condo for any unpaid assessments from the time the assessment is due. (Wash. Rev. Code § 64.34.364(1)). The recording of the COA's governing documents, the Declaration of Condominium, in the county records constitutes record notice and perfection of the lien. The COA doesn't have to record the lien in the county records, although it can do so if it wants. (Wash. Rev. Code § 64.34.364(7)).
If you make a written request to the COA, the association must provide you with a statement of the amount due within 15 days after receiving the request. (Wash. Rev. Code § 64.34.364(15)).
If you are part of an HOA, check the association's governing documents, specifically the Declaration of Covenants, Conditions, and Restrictions (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 that the association may impose in addition to the past-due assessments. In Washington, a COA also has the power to impose:
To find out which charges an HOA in Washington may include in its lien, check the association's governing documents.
Once a COA or HOA has a lien, it may foreclose.
In Washington, a COA lien may be foreclosed:
Statute of limitations for COA liens and assessments. Unless the COA starts a foreclosure or sues the condo owner for payment within three years after the full amount of the assessments becomes due, a lien for unpaid assessments, as well as the condo owner's personal liability for the assessments, is extinguished. (Wash. Rev. Code § 64.34.364(8)).
To find out about an HOA's right to foreclose if you become delinquent in paying the assessments, read the association's governing documents.
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, COA liens are generally prior to all other liens, except for:
But under Washington law, a COA is entitled to a super lien over mortgages recorded before the date that the assessment became delinquent in an amount equal to six months' worth of delinquent common expense assessments. (Wash. Rev. Code § 64.34.364(3)). This priority lien can be reduced by up to three months under certain circumstances and, if the COA elects to foreclose nonjudicially, it's not entitled to a super lien. (Wash. Rev. Code § 64.34.364(4),(5)).
To find out the priority of an HOA lien in Washington, check the association's governing documents. Often, an HOA's CC&Rs will state that an HOA lien is subordinate to a lender's mortgage.
If you're facing a COA or HOA foreclosure in Washington, 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.