If you are a resident in a newer home community or a low-maintenance planned community, chances are that you have a homeowners association (HOA). The HOA collects money from residents to use for property maintenance. If you don’t pay your HOA fees on time, the HOA may consider foreclosing on your home.
Can the HOA Really Foreclose on My Home?
Many residents find the idea of their HOA foreclosing on their home to be astounding. HOA fees are typically nowhere near the value of an entire property. They just can’t wrap their mind around the thought that the HOA could take their house. Yet it is a possibility. If your HOA has threatened foreclosure, don’t disregard the threat entirely. Learn the facts. Ask questions. Seek out legal advice.
How Does an HOA Foreclose on Your Home?
Your HOA may be allowed to foreclose on your home if you fail to make your HOA payments as agreed. An HOA can file a claim of lien if a resident fails to pay their assessed fees. Depending on state law, the HOA may also file a claim for unpaid fines due to non-compliance with the association’s governing documents. The “lien” takes a legal claim for money that is owed and asserts it against the property. The HOA can assert their claim for unpaid fees against both the resident individually and the resident’s property.
The HOA Foreclosure Process:
The HOA’s claim on the property is recorded with the county land records, which means the general public is considered to have “constructive notice” or notice that the property is subject to a debt. When a property is “subject to a debt,” any refinance, sale or transfer of the property is first made subject to the claim against the property.
The lien effectively enables the HOA to sell your property to pay the past due fees. The lien also acts as a cloud on the property’s title that blocks you, as the resident/owner, from selling or refinancing your home without satisfying the debt.
How Easy Is It For an HOA to Foreclose?
In the state of Tennessee, an HOA can foreclose on a property as soon as the lien is attached. HOAs can exercise judicial foreclosures or, if permitted by the HOA’s declaration documents, they may exercise a non-judicial foreclosure. Some feel that the ease with which an HOA can foreclose lends itself to potential abuse.
If you are hoping to avoid an HOA foreclosure by filing bankruptcy or you have questions about bankruptcy, we can help. Don’t waste time, get in touch with Kenneth C. Rannick P.C., Tennessee and Georgia bankruptcy attorney as soon as possible.