HOA Assessment Lien

What an assessment lien is

When an owner does not pay regular or special assessments, the association usually has more than a debt to collect. Most governing documents, supported by state law, give the association a lien on the property. A lien ties the unpaid amount to the property itself, so it can affect a sale or refinance and can be paid out of closing proceeds. It does not mean the home will be lost, because foreclosure is a separate and heavily regulated step.

What the lien can secure

It depends on the state and documents. Common items are unpaid assessments, late charges, interest, collection costs and attorney fees. Fines are treated differently from state to state, and some states restrict whether fines can be secured by a lien or foreclosed on.

Examples from state law

These are examples only, and your state may differ.

California: the assessment, plus collection costs, late charges and interest, becomes a lien on the owner's separate interest from the time the association records a notice of delinquent assessment. The notice must state the amount, a legal description and the record owner's name, must be signed as the statute provides, and a copy must be mailed by certified mail to the owner no later than 10 calendar days after recording (Civil Code section 5675). An association cannot foreclose on delinquent regular or special assessments of less than $1,800, not counting accelerated assessments, late charges, fees, attorney's fees or interest, though it may sue in small claims court or record a lien. It cannot foreclose on a recorded lien until the delinquent assessments equal or exceed $1,800 or are more than 12 months delinquent, and before recording the lien it must offer the owner dispute resolution (section 5720).

Florida HOAs: when authorized by the governing documents, the association has a lien on each parcel. A claim of lien must state the parcel description, the record owner, the association's name and address, the assessment amount due and the due date. Before recording it, the association must send a written notice of intent giving the owner 45 days to pay, and it may not start a foreclosure action until 45 days after a further notice of intent to foreclose. An owner can record a notice of contest that gives the association 90 days to sue to enforce the lien, after which the lien is void if no action is filed. A first mortgagee that takes title by foreclosure is liable for the lesser of the prior 12 months of unpaid assessments or one percent of the original mortgage debt, subject to conditions (Florida Statutes section 720.3085).

Michigan condominiums: unpaid sums, with interest, collection and late charges, attorney fees and fines allowed by the condominium documents, are a lien on the unit, ahead of other liens except tax liens and sums unpaid on a first mortgage of record, with an exception for liens evidenced by a recorded notice of lien. A foreclosure may not begin without recording and serving a notice of lien, served by first-class mail at least 10 days before the proceeding starts. The statutory redemption period is generally 6 months from the sale, or 1 month if the property is abandoned (MCL 559.208).

How owners and buyers can protect themselves

Owners who fall behind should contact the board or manager early, ask for a written account statement and ask about payment plans. Buyers and lenders usually see lien information on an estoppel certificate, so it is worth ordering one in time. A lien is typically released once the amount secured is paid in full and the association records a release, but the form of release and timing vary by state.

Related

• Estoppel certificate glossary entry
• Special assessment glossary entry
• What do HOA fees cover?
• Alternative dispute resolution glossary entry