HOA and Condo Association Foreclosure: A Hidden Risk

Most homeowners think foreclosure only comes from their mortgage lender. But homeowners' associations (HOAs) and condominium associations can foreclose on your property for unpaid assessments, fines, and fees — even if you're current on your mortgage. In many states, HOA liens have 'super-priority' status, meaning they can take precedence over a first mortgage. This is a serious and often surprising risk that every homeowner in an HOA-governed community should understand.

HOA foreclosure typically begins with a notice of delinquent assessment, followed by the recording of a lien against the property. If the debt remains unpaid, the HOA can initiate foreclosure — usually through non-judicial trustee sale, since most HOA governing documents include a power of sale. The amounts at issue are often small compared to a mortgage loan — sometimes just a few thousand dollars — making HOA foreclosure particularly devastating: you can lose a home worth hundreds of thousands over a fraction of that amount in unpaid HOA dues.

Defending against HOA foreclosure focuses on several grounds: challenging the validity of the assessment or the amount claimed (HOAs must follow their own governing documents and state law when imposing assessments), asserting payment or partial payment as a defense, negotiating a payment plan (most HOAs would rather collect than foreclose — they don't want to own your property), and in some cases, filing bankruptcy to discharge the HOA debt (though post-petition HOA assessments in Chapter 7 can be problematic).