HOA Liens: What homeowners need to know

Homeownership often comes with a myriad of responsibilities and obligations, and one of those can be belonging to a Homeowners Association (HOA). While HOAs serve the purpose of maintaining community standards and amenities, they also have the authority to enforce rules and collect fees from homeowners. One of the tools at their disposal is the HOA lien, a legal claim placed on a property for unpaid dues or violations. In this comprehensive guide, we'll explore what HOA liens are, how they work, and their implications for homeowners.
 

What is an HOA lien?

An HOA lien is a legal claim that a homeowners association places on a property when the homeowner fails to pay their dues or assessments. It gives the HOA the right to collect the unpaid amounts by foreclosing on the property if necessary. Essentially, it's a way for the HOA to secure its financial interests against non-compliant homeowners.
 

How do HOA liens work?

When a homeowner becomes delinquent in paying their HOA dues or assessments, the HOA typically follows a specific process before placing a lien on the property. This process typically includes sending multiple notices and warnings to the homeowner, providing them with opportunities to catch up on payments or resolve any disputes.

If the homeowner continues to neglect their obligations, the HOA may then file a lien with the county recorder's office, officially establishing the association's claim on the property. Once the lien is filed, it becomes a matter of public record, which can affect the homeowner's ability to sell or refinance the property.
 

Can an HOA put a lien on your house?

Yes, an HOA can put a lien on your house if you fail to pay your dues or assessments. HOA liens are legally enforceable, and homeowners are obligated to comply with the terms of their HOA agreements, which typically include paying dues and assessments in a timely manner. Failure to do so can result in the HOA taking legal action to protect its financial interests.
 

What happens when an HOA puts a lien on a house?

Once an HOA puts a lien on a house or unit, it can take several actions to enforce its claim on the property. These may include:

• Foreclosure: If the homeowner continues to ignore the lien and fails to pay the outstanding amounts, the HOA may initiate foreclosure proceedings. This can result in the sale of the property, with the proceeds being used to satisfy the unpaid dues and assessments.
   
• Legal Costs: In addition to the unpaid dues and assessments, the homeowner may also be responsible for covering the legal costs associated with enforcing the lien, including HOA attorney fees and court costs.
   
• Credit score impact: A significant consequence of having an HOA lien on your property is the potential impact on your credit score. While the specifics can vary depending on the credit reporting agency and other factors, having a lien on your property is generally considered a negative mark and can lower your credit score.
   
• Difficulty selling or refinancing: Having an HOA lien on your property can also make it more challenging to sell or refinance the property. Prospective buyers and lenders may be hesitant to get involved with a property that has a lien attached to it, which can limit your options and potentially lower the property's value.

Does an HOA lien affect your credit score?

Yes, an HOA lien can have a negative impact on your credit score. When a lien is filed against your property, it becomes a matter of public record, and credit reporting agencies may take this into account when calculating your credit score. As a result, having an HOA lien on your property can lower your credit score and make it more difficult to qualify for loans or lines of credit in the future.
 

How does a homeowners association file a lien?

The process for filing an HOA lien can vary depending on state laws and the specific procedures outlined in the HOA's governing documents. However, it typically involves the following steps:

• Notice: The HOA must provide the homeowner with notice of the delinquency and an opportunity to cure the default. This often involves sending multiple notices via mail and/or email, as well as attempting to contact the homeowner by phone.
   
• Demand Letter: If the homeowner fails to respond to the initial notices, the HOA may send a demand letter outlining the amounts owed and warning of the association's intention to file a lien if the debt is not paid within a specified timeframe.
   
• Lien Filing: If the homeowner still does not pay the outstanding amounts, the HOA may file a lien with the county recorder's office. This officially establishes the association's claim on the property and notifies other parties, such as potential buyers or lenders, of the association's interest.
   
• Enforcement: Once the lien is filed, the HOA may take further legal action to enforce its claim on the property, such as initiating foreclosure proceedings or pursuing other remedies available under state law.

In conclusion, HOA liens are a powerful tool that homeowners associations use to enforce payment of dues and assessments. While they serve a legitimate purpose in ensuring that all homeowners contribute their fair share to the upkeep of the community, they can also have serious consequences for homeowners who fail to meet their obligations. It's essential for homeowners to understand their rights and responsibilities regarding HOA liens and to address any delinquencies promptly to avoid potentially costly repercussions.

To learn how a professional management company can provide additional support to your community, contact a member of our team at FirstService Residential.