Your Guide to Liens When Purchasing in an HOA Homeowners’ associations are carefully managed, with common areas, landscaping, and other community maintenance funded by monthly assessments.
Assessments, also known as dues or fees, are required by all homeowners and must be paid regularly to remain in good standing with the association. If a homeowner fails to pay their assessments, the HOA may apply additional fines and will try to collect using traditional methods such as phone calls, emails, or letters. If these methods fail, the HOA has the power to place a lien on the property, which could ultimately lead to foreclosure.
What is a Property Lien?
Simply put, a lien is a legal claim placed on a property that gives the holder the right to obtain said property if debts are not paid. When a homeowner fails to fulfill their contractual obligations and a court issues the requested lien, it is usually recorded with the county and becomes a public record. The lien must then be settled by the homeowner and must be resolved in order to sell the property.
What to Expect When a Lien is Filed
When a lien process is initiated by the HOA, the homeowner can expect to receive a notice from the association stating their intent to file a lien.
According to what is set forth in the HOA governing documents, the lien may include:
Unpaid assessments
Interest
Late fees
Legal fees
Collection costs
Other fines
Check the Law
It’s important for any homeowner who has a lien threatened or filed against them to review both the association governing documents as well as their state’s HOA laws. State laws vary in the procedural requirements and precise content of lien notices, and governing documents should include what payments may be included in the lien. If these requirements are not met and the proper procedure followed, the lien may be considered invalid.
Lien Removal
To remove a lien and avoid foreclosure, the homeowner must pay in full any debt they owe to the association, plus any interest or applied fees. The homeowner may also be responsible for the recording costs and attorney’s fees incurred by the association. Once settled, the association will record a lien release in the county records, indicating to anyone conducting a title search on the property that the lien is no longer outstanding.
Written By Spectrum AM for The OC Register
