Can your HOA foreclose on your home?

Theo Thimou | October 5th, 2018

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The battle between individual homeowners and mandatory homeowners associations (HOA) in covenant communities is nothing new.

But it can take a particularly ugly turn if you fall behind on your HOA dues.

The ugly truth about the rights of your HOA

While only slighly more than two million people lived in covenant communities in 1970, that number skyrocketed to 69 million by 2016, according to the Community Associations Institute.

Yet HOAs remain a love it or leave it kind of proposition for many homeowners.

Some people favor them because the strict set of rules they have ensure that common areas are kept up, homes retain their curb appeal and values can’t be hurt by one errant homeowner who lets their property go to seed.

Others hate HOAs because they don’t want to be told to paint their house a certain color or have a certain kind of fence. Those are just two examples of the kind of personal freedoms of choice you may have to cede in a covenant community.

No matter what your personal feeling about mandatory HOAs, you’ve got to be careful if you’re falling behind on your monthly HOA fees or assessments.

That’s because the HOA generally has the right to foreclose on your home!

Here’s how a foreclosure could happen

According to Nolo.com, the basic M.O. here is that many HOAs have it written in their Declaration of Covenants, Conditions and Restrictions that they can put a lien on your property for failure to pay your dues or assessments.

That lien essentially allows the HOA to foreclose — even if you’re current on your mortgage. Worse yet, in some states HOAs are granted what’s called “Super Lien” status, meaning that the HOA lien takes priority status even over the bank or credit union that holds the mortgage on the property.

According to CoreLogic Inc., there are currently about 20 states that have HOA Super Lien status:

CoreLogic

If you live in one of these states, it’s not uncommon for foreclosure proceedings to begin anywhere between six and nine months after you fail to pay your HOA dues.

So how often does this actually happen?

As Nolo notes, an HOA may aggressively want to pursue a foreclosure as a kind of nuclear option. It’s seen as the final straw that forces you — or even your mortgage holder, in some special circumstances — to come up with the money.

Because that’s what the HOA really wants in the first place — not your home.

Now, we should note there are a variety of possible defenses against HOA foreclosure. But if you’re in a situation where failure to pay HOA dues is threatening your home, you should definitely consult with a foreclosure attorney in your state.