What Can an HOA Do If You Don't Pay?

Homeowners associations (HOAs) and condo associations fund maintenance, insurance and amenities through assessments. Owners agree to pay them when they buy, under covenants recorded against the property (Cornell LII).

Typical steps when dues go unpaid

1. Late fees and interest, as allowed by the governing documents and state law
2. Suspension of privileges, such as pool, gym or voting rights
3. Collection letters, often from a management company or law firm
4. Lien: the HOA records a lien against your property for the unpaid amount, which must be paid when you sell or refinance (Cornell LII)
5. Lawsuit for a money judgment
6. Foreclosure on the lien, judicially or non-judicially depending on state law

Can an HOA foreclose?

In many states, yes, even for relatively small amounts, although some states set minimum amounts, waiting periods or require judicial foreclosure. In some states a portion of the HOA lien has priority over even a first mortgage. Foreclosure can happen even if your mortgage is current.

Your rights

• Review the documents: the CC&Rs, bylaws and collection policy set what the HOA may charge.
• Request an accounting of the amount owed.
• Dispute errors in writing.
• Payment plans: many states require HOAs to offer them before foreclosing.
• Debt collection protections: HOA assessments on a home are consumer debts, so third-party collectors must follow the FDCPA (15 U.S.C. 1692a). See what debt collectors can do.
• Notice and hearing before fines or suspension, in many states.

Do not withhold dues over a dispute

Even if the HOA is not fixing something, withholding dues usually gives the HOA the right to collect fees and pursue liens. Use the dispute process, records requests, board elections or legal action instead.

If the HOA goes bankrupt or mismanages funds

Owners may face special assessments. Review budgets and reserve studies, attend meetings, and ask for records, which many states give owners the right to inspect.

Before buying

Check dues, special assessments, reserves, pending litigation and the collection policy. See what happens at a real estate closing.

A real estate lawyer can review HOA claims and foreclosure notices quickly.

Sources

1. Cornell Law School LII: Homeowners association
2. Cornell Law School LII: Lien
3. Cornell Law School LII: 15 U.S.C. 1692a(5), Definition of debt