Planned communities are often governed by an HOA, or a Homeowners Association. HOAs generally charge fees associated with the upkeep and maintenance of common areas, within the community such as pools, shared patios, esplanades, neighborhood parks and other amenities. At times when funds are stretched very thin (perhaps following a layoff, an accident or a divorce), homeowners may find themselves getting behind on HOA fee payments. Sometimes, people can get so far behind in payments that it is hard to catch up. Let’s take a closer look at HOA rules and whether or not defaulting on HOA fee payments can lead to foreclosure.
Concerned you may be at risk of losing your most valuable possession in a foreclosure? Contact Sirody & Associates for a free consultation. Call (410) 415-0445.
HOA Roles And Responsibilities
An HOA is a legal entity with legal powers and is usually comprised of homeowners who live in the community. Homeowners Associations perform important functions intended to maintain property values and keep the neighborhood or community looking aesthetically appealing. An HOA is charged with collecting annual fees for things like landscaping, snow removal, maintenance of the community clubhouse, common areas and facilities and one-time assessments for special projects or improvements such as street repairs or building a new fitness room.
Depending on the legal terms that are a part of the Homeowners Association contracts, a homeowner may be liable for fees related to unpaid assessments, fees, HOA fines, legal fees or even interest charges. Most HOAs have the power to place a lien on the home of a homeowner who has failed to pay these assessments, and a lien can make it impossible to refinance or even sell the home. Worse still, a lien can lead to a home foreclosure if the debt owed is unable to be satisfied without selling the home.
HOA Liens And Foreclosure
Laws about HOA liens and foreclosure vary from state to state, so it’s helpful to consult an experienced attorney who can help you understand your rights. Depending on the state of residence an HOA can foreclose judicially, which means the HOA would need to file a lawsuit against the homeowner who is behind in HOA fees to obtain a judgement from the court. In other states, like Maryland, an HOA can also foreclose non-judicially by following specific requirements determined by the state’s laws. State laws that govern HOA liens are extremely detailed, so again, it’s highly recommended that homeowners work with an attorney who has deep experiences with that state’s foreclosure laws. Non-judicial foreclosures generally move along much faster than judicial as there is no court involved.
HOA Foreclosure Limitations
Although an HOA may have the power to attach a lien to a house title, it does not necessarily mean that foreclosure is a foregone conclusion. Most states have very strict process requirements that HOAs must follow to foreclose, as well as specific time or delinquency-amount limitations. For example, in Maryland any action to foreclose must be started within 3 years after the date that the statement of lien was recorded. Some states may require that the HOA assessment delinquency be a minimum of 12 months old, which buys the homeowner some additional time to pay back the debts. As another positive,many states offer homeowners the right to repurchase their home following an HOA lien foreclosure – this is referred to as the “right of redemption”. As with the HOA lien foreclosure laws, right of redemption laws vary widely state by state. In Maryland, homeowners may exercise right of redemption at any point up until the foreclosure sale is ratified by the court.
Experienced Foreclosure Attorneys
If you’ve fallen behind on your HOA fee payments and you are facing a lien or foreclosure, it may be time to consult an experienced, licensed attorney. Bankruptcy may be a practical option to help eliminate debts and get you caught up with HOA fee payments. At Sirody and Associates, we clearly outline all available options to homeowners who are facing debt and provide them with the information they need to make the best choice to recover their financial freedom. We’ve been helping Marylanders get out of debt for over 20 years. If you are struggling financially and worried about losing your condo, townhome or single family home, contact us online or call (410) 415-0445.