Homeowners associations (HOA) must balance keeping their community’s finances healthy and helping neighbors during tough times. But when homeowners fall behind on their dues, it can affect everyone. Recovering these unpaid dues through liens and foreclosures may be a difficult but necessary duty.
Placing a lien
Filing a lien helps HOAs recover unpaid dues and ensures that homeowners pay them before selling or refinancing a property. Here’s an overview of the process:
- The HOA sends a written notice of intent to record a lien by registered and first-class mail. The notice gives the homeowner 45 days to pay the amount due.
- If the homeowner does not pay or respond, the HOA prepares a lien document. This document includes the amount owed, the property’s legal description and the homeowner’s name.
- After recording the lien in the county’s public records, the HOA sends the homeowner a copy of the recorded lien to ensure they are aware of it.
If the debt is still unpaid, the HOA can start foreclosure proceedings to sell the property and recover the dues.
Starting foreclosure proceedings
The HOA must send a second written notice of intent – this time to foreclose – giving the homeowner another 45 days to pay the amount due. If they do not pay, the HOA must file a lawsuit detailing the amount owed and the reason for foreclosure. The homeowner gets a summons and a copy of the complaint, allowing them to respond or negotiate a settlement. The court will schedule a hearing if the homeowner does not respond or settle.
The court may issue a foreclosure judgment if it finds that the HOA’s claim is valid and the homeowner has not paid the outstanding dues. The county sheriff or a court-appointed official will sell the property at a public auction. The sale proceeds pay off the dues, legal fees and other costs. Any leftover funds go back to the homeowner.
Doing your due diligence
Legal actions like placing liens and initiating foreclosures are powerful tools that carry significant consequences. Make sure you consult with experienced legal professionals.