CAN AN HOA REALLY FORECLOSE ON MY HOUSE?
We recently had an urgent call from a lender friend of ours who had been working with a client/friend of theirs who had just recently found out that their HOA had started foreclosure proceedings on their property. My first thought was, “Can an HOA foreclose?”. So I decided that I would do a little more research on the matter.
The short answer – Yes, an HOA can foreclose on a house. According to an article posted on Nolo.com, “If you live in a house, condo, or townhome that is part of a common interest community, you are responsible for paying dues and assessments to the homeowners’ association (HOA) or condominium association (COA). If you don’t pay, in most cases the HOA or COA can get a lien on your property that could lead to a foreclosure.”
When a homeowner falls behind on paying their HOA fees and special assessments, the HOA is then legally within their rights to place a lien on the property. There are, however, two criteria in the state of Arizona that have to be met before a lien can be obtained. The first is that the home owner has to be at least one year delinquent in their fees and assessments and the second is that the total delinquent amount is $1,200 or more. Once these two criteria are met, the Home Owners Association is within their rights to obtain a lien on the property.
According to the article, the HOA/COA lien holds priority before all other liens on a property EXCEPT: liens recorded before the declaration of the CC&Rs, liens for real estate taxes and other governmental charges, and a first mortgage that was recorded prior to the HOA/COA lien. There is also a “statute of limitations” on an HOA/COA lien. According to the article, “In order for the lien to remain valid, the HOA or COA must initiate an action to enforce the lien within three years from the date that the full amount of the assessments became due (Ariz. Rev. Stat. § 33-1807(F), § 33-1256(F)). This is called the statute of limitations.”
In the case of this particular lender’s client/friend, proceedings has been started. The client and the lawyers are working through a deal and the home owner will be selling the house, which has a fair amount of equity, in order to pay off the lien. If you find yourself in a similar situation, you should consult a lawyer to find out what options you have for your specific circumstances and if you find that selling your house is a part of that solution, please consider us to help you meet your real estate goals.
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