Homeowner’s Associations and Super Liens

Foreclosure, HOA, Super Liens

A homeowner’s association (HOA) is authorized to take certain actions if a property owner is delinquent in paying his fees and assessments. Some states authorize homeowner’s associations to impose “super liens,” which are given the highest priority among lien holders. In other states, an HOA is not entitled to a super lien and instead, is subordinate to a first mortgage lender.

HOA Powers When a Member is Delinquent in Paying Assessments

HOAs collect dues from members in order to pay for maintenance, insurance and other costs associated with managing the association. If a homeowner fails to pay HOA fees (even if the owner is up to date on mortgage payments), the HOA can record a lien on the member’s property. In many jurisdictions, if the deficiency is not corrected, the HOA can garnish the homeowner’s wages and bank accounts or foreclose on the property. In some states, a HOA can foreclose on a lien for any delinquency regardless of the amount. In other states, an HOA can pursue foreclosure only if the unpaid dues and penalties exceed a certain amount. In Georgia, HOAs are permitted to foreclose on properties where the homeowner is more than $2000 overdue in assessments and/or fees.

General Priority of Liens

The priority of liens is generally set by the recording date and determines the order of payment if the debtor is in arrears and the property is sold in foreclosure. Upon purchase, the buyer usually obtains a first mortgage that becomes the first lien on the home. If the owner obtains a second mortgage on the home, that lien is recorded and becomes the next in priority. In many states, including Georgia, an HOA lien has priority over other liens except property taxes, a mortgage or deed of trust and a secondary mortgage. As HOA liens are generally recorded after first mortgage liens, they are often subordinate to first mortgage liens.

Some States Permit HOAs to Impose Super Liens

In states that authorize super liens, the HOA is the first debtor to collect proceeds once the property is foreclosed upon. Thus, the HOA is given higher priority than the holder of the first mortgage and can extinguish a first mortgage lien. Super liens are authorized by state law, but are often subject to specific limitations and requirements.

The experienced team of attorneys at the Law Offices of Mark Weinstein, P.C. can help you litigate your real estate claims. Contact Mark Weinstein and his colleagues at (770) 888-7707 or visit them at http://www.markweinsteinlaw.com to find out how they can advise you.

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