HOA - Defenses to an HOA Foreclosure

If your Homeowners Association initiates a foreclosure of your home, condo, or town-home, you may have a defense.


If you owe dues or assessments to your homeowners’ association (HOA), the HOA can foreclose on your home, condominium, or town-home if you default on those payments. However, there are defenses available to an HOA foreclosure.

Liens for HOA Assessments:

If you don’t pay the fees and assessments imposed by your HOA (collectively called “assessments”), as required by the Declaration of Covenants, Conditions, and Restrictions (CC&Rs), in many cases, a lien will usually automatically attach to your property. Additionally, sometimes the HOA will record a lien with the county recorder to provide public notice that the lien exists, even if your state doesn't require the lien to be recorded.

An HOA Can Foreclose for Unpaid Assessments:

What homeowners don’t always realize is that, even if you are current on your home mortgage payments, you could lose your house to foreclosure if you do not pay the HOA assessments. If an HOA has a lien on your property, it may foreclose that lien. The foreclosure will occur in much the same way it would if your mortgage lender were to foreclose. This means you could lose your home even if you are only a few hundred or thousand dollars behind on HOA assessments.

Available Defenses to an HOA Foreclosure

To fight an HOA foreclosure, you may be able to raise one or more of the following defenses:

  • The HOA Did an Incorrect Accounting or Overstated Charges

    The HOA Did an Incorrect Accounting or Overstated Charges


    Sometimes assessment liens are invalid due to incorrect accounting by the association or its management company. If you believe the HOA has improperly calculated the assessments and raise this as a defense, the HOA must show how all amounts were calculated, including assessments, late fees, interest, fines, and costs, all of which must be in the correct amount and have a basis provided for in the CC&Rs.

  • Failure to Follow the Assessment Lien Foreclosure Statutes

    Failure to Follow the Assessment Lien Foreclosure Statutes


    If the HOA fails to adhere to the state statutory requirements, the foreclosure can be dismissed. For example, in California, the delinquent assessments must exceed $1,800 or the delinquency must be at least 12 months old before the HOA can initiate foreclosure proceedings (Cal. Civ. Code §1367.4). If the HOA prematurely initiates a foreclosure, the homeowner can raise the failure to adhere to the statutory requirements as a defense.

  • Unreasonable Charges

    Unreasonable Charges


    The fines, interest, late fees, management fees, and attorneys’ fees assessed must be reasonable. For example, if the HOA forecloses due to $500 in back dues, but penalties and costs associated with the foreclosure (such as fines and attorneys’ fees) increase the amount due to over $10,000, a judge may very likely decide this is unreasonable.

  • The Assessment is Not Authorized by the Governing Documents

    The Assessment is Not Authorized by the Governing Documents


    Sometimes, an HOA may assess a charge that is not authorized by the CC&Rs. If the HOA then initiates foreclosure of the lien that is the result of an unauthorized charge, the lien (and foreclosure) would be invalid.

  • Misapplication of Payments

    Misapplication of Payments


    Depending on the state and the CC&Rs, in many cases, payments to an HOA must first be applied to assessments before any other type of debt. This means that an assessment lien and subsequent foreclosure may be invalid if the HOA applied payments to a category other than assessments, such as fines.

  • Improper Recording of the Assessment Lien

    Improper Recording of the Assessment Lien


    In some states, the lien for assessments must be perfected through recordation of the lien. If the HOA improperly records the lien (or does not record the lien at all) in a state that requires recordation, this can provide a defense to the foreclosure.


    Also, if an assessment lien is improperly recorded against a property, the property owner may be able to bring a wrongful lien claim against the HOA.

  • The HOA is Not Authorized by its Governing Documents to Foreclose

    The HOA is Not Authorized by its Governing Documents to Foreclose


    Generally, the CC&Rs will contain a provision governing how and when the HOA may foreclose. However, in some cases, the CC&Rs may not authorize foreclosure.

  • What to Do if You are Facing Foreclosure By an HOA?

    What to Do if You are Facing Foreclosure By an HOA?


    These are only a few of the possible defenses available to an HOA foreclosure, but there are, of course, others. HOA laws vary widely from state to state and are complicated. Additionally, the way you will need to fight an HOA foreclosure differs depending on whether the foreclosure is judicial or non-judicial.


    If you are facing a foreclosure due to unpaid HOA assessments, you should consult with a licensed attorney in your state to discuss all legal options available in your circumstances.

HOA Liens & Foreclosures - An Overview


If you don't pay homeowners association dues or assessments, the HOA can foreclose

When you purchase a house, condo, or townhome that is part of a planned, covenanted community, you will most likely pay monthly fees and assessments to a homeowners’ association. If you become delinquent in paying those fees and assessments, the homeowners’ association will be able to get a lien on your home that could lead to a foreclosure.

Understanding Homeowners’ Associations

To fully understand HOA liens and how they work, you must understand the basic terms involved in covenanted communities.

  • Homeowners’ Association (HOA)

    Homeowners’ Association (HOA)


    An HOA is a legal entity set up to manage and maintain the neighborhood. Its members usually consist of homeowners in the community. The original developer of the community typically creates the HOA. The rules of the community are typically set forth in what is called the Declaration of Covenants, Conditions, and Restrictions (CC&Rs). The main functions of the HOA are:


    • To collect assessments and fees, and to enforce the rules of the community.

    HOA communities may consist of single-family homes, townhomes, or condominiums, though separate state laws may govern homeowner associations in subdivision communities and condominium associations.

  • HOA Fees

    HOA Fees


    Homeowners that live in a covenanted community will often be required to pay a periodic fee to the HOA to cover maintaining the community. For example, the HOA will collect fees to pay for things like landscaping, security, snow removal, as well as repairs and maintenance for community facilities (such as pools, tennis courts, workout rooms, and clubhouses). The fees also pay the salaries of HOA employees. To determine the amount that each homeowner must pay, the HOA will typically develop a budget and divide the total expenses by the number of homes in the community. The homeowner must pay his or her share monthly (or other fixed schedule) throughout the year.

  • HOA Special Assessments

    HOA Special Assessments


    At times, the HOA may levy special assessments for one-time expenses if the HOA's reserve funds will not cover the cost of a major repair or improvement. For example, an HOA may levy a special assessment to pay for a new roof for the community clubhouse or to pay for a new road.

  • How HOA Liens Work

    How HOA Liens Work


    Almost all HOAs have the power to place a lien on the homeowner’s property if he or she becomes delinquent in paying the monthly fees and/or any special assessments (collectively referred to as “assessments”). Once any HOA homeowner becomes delinquent on the assessments, a lien will usually automatically attach to that homeowner's property, typically as of the date the assessments became due. In some cases, the HOA will record a lien with the county recorder to provide public notice that the lien exists, regardless of whether recordation is required.


    Depending on the terms in the CC&Rs, the homeowner may be liable for charges such as:


    • Unpaid assessments
    • Late charges
    • Reasonable costs of collecting (for example, attorneys’ fees)
    • Fines (in some cases
    • Interest

    Not only will an assessment lien cloud the title to the property, thus hindering the homeowner’s ability to sell or refinance, but also it can be foreclosed, and the property sold to satisfy the debt.

Foreclosure of HOA Liens

If an HOA has a lien on a homeowner’s property, it may foreclose on that lien (even if there is a mortgage on the property) as permitted by the CC&Rs and state law. The HOA can foreclose either through judicial foreclosure or a non-judicial trustee’s sale, depending on state law and the terms in the CC&Rs.

To judicially foreclose an assessment lien, the HOA must file a lawsuit against the homeowner and obtain a judgment from the court granting permission to sell the home to satisfy the HOA’s lien.

To non-judicially foreclose, the lender does not have to go through state court, but rather follows specific procedures as dictated by state law, as well as the CC&Rs.

Foreclosure

  • What Happens to a Mortgage if the HOA Forecloses?

    What Happens to a Mortgage if the HOA Forecloses?


    Often, the CC&Rs and/or state law contain a provision that the HOA lien has priority over all liens and encumbrances recorded after the recordation of the declaration of CC&Rs except a first mortgage (or deed of trust) that was recorded before the date the assessment became delinquent. If this is the case, the first mortgage lien will remain on the property following the HOA foreclosure. A second mortgage, on the other hand, would typically be wiped out by the foreclosure of a senior HOA assessment lien, though this also depends on state law.

  • Limitations on HOA Foreclosures

    Limitations on HOA Foreclosures


    State laws often place due process requirements on HOAs regarding how and when they can foreclose an assessment lien. For example, in California, the delinquent assessments must equal or exceed $1,800 or the delinquency must be at least 12 months old before the HOA can initiate foreclosure proceedings (Cal. Civ. Code §1367.4). To learn about the laws governing HOA foreclosures in your state, review your state’s statutes. (To find out how to do your own legal research, see While states often restrict the circumstances under which an HOA can foreclose, the bottom line is that, in most cases, an HOA can eventually foreclose if you default on assessments in much the same way a lender would foreclose a defaulted mortgage.

 Source: Nolo.com