A homeowners' association (HOA) can take steps against a delinquent member to collect past-due assessments he might owe. In doing so, the HOA has a right to place a lien on the member's property that will secure payment of the debt. Before it can place a lien, the association must inform the homeowner of its intent in writing. according to the HOA Institute.
What is a Property Lien?
A lien is a legal claim on a property that secures a payment of debt. A lien holder may sell the property to satisfy the outstanding debt. A homeowners' association (HOA) has a right to place an assessment lien when a homeowner becomes delinquent on his payments. Once an assessment lien is placed, a homeowner may not be allowed to sell or refinance the property until the lien is satisfied. An assessment lien allows the HOA to sell the homeowner's property to repay the outstanding dues.
Placing a Lien
According to the HOA Institute, almost any homeowners' association places an automatic lien on an association member's property for the periodic assessments that every member must pay according to the agreement. As long as the association member pays the dues on time, the HOA does not record a separate lien. If a member violates the association's Declaration of Covenants, Conditions and Restrictions, the HOA can obtain a judgment against him. Before filing a lawsuit, an association notifies him by mail of the intent and the possible consequences of such a judgment, including an assessment lien. When notified of a hearing, the homeowner can contest the lawsuit in court. If the court awards a judgment against a homeowner, an HOA can then record a lien.
Collecting an Assessment Lien
An assessment lien allows an HOA to judicially foreclose and sell the property to collect the outstanding debt. However, HOAs usually don't want to incur the expense of going through a lengthy and expensive foreclosure and sale process. An association usually records an assessment lien and waits for the payment when the homeowner decides to sell the property. A lien must be repaid from the sale proceeds during the closing.
Restrictions
An HOA may only place an assessment lien for past-due association payments, late and collections charges, and attorney's fees. An association can seek an assessment lien only if a homeowner is delinquent for 12 months. A homeowner can repay the delinquent amount or negotiate a repayment plan at any time. When receiving payments, an HOA must apply them first to the past-due assessment balance before paying off other charges. A homeowner has a right to contest a lien in court by filing a request to have a hearing.
0 comments:
Post a Comment