How Can an HOA or COA Foreclose on its Residents?
The District of Columbia provides a number of options to residential associations, including condominium owners associations (COAs) and homeowners’ associations (HOAs). These associations generally oversee housing communities made up of condominiums, town houses or single-family homes, and maintain the communities through the payment of dues.
Occasionally, residents fail to pay their COA or HOA dues. Having too many residents miss payments can cause serious issues for owners associations, and it may be grounds for foreclosure for individual residents.
In the event that a resident fails to pay these dues, a COA or HOA may place a lien on the property. COAs are entitled to place a lien on a condo unit when a person fails to pay dues or assessments for the unpaid amount. If these fees are paid in installments, the lien may cover the entire amount of the assessment. In addition, as long as the COA has its governing documents recorded in the county records, this is considered notice to the resident and works as perfection of the lien. The COA does not have to go to the extra effort of filing and recording an additional lien on the property or perfecting the existing one.
HOAs differ depending on the specific association. While many allow for such liens, they do not function as a matter of the law the way COA liens do. An HOA would need to check its bylaws to learn if it has a right to place a lien on a home based on the resident’s failure to pay dues or assessments.
Once you have a lien in place, you do have the right to foreclose. Even if the individual resident is up to date on his or her mortgage, the failure to pay assessments is considered a material breach. In these circumstances, you can move forward with either a non-judicial foreclosure if you’re in a COA or a foreclosure based on the bylaws of the HOA.
If you sit on the board of a COA or HOA in the Washington, D.C. area and need to explore remedies due to nonpayment by residents, contact a knowledgeable real estate lawyer with Tobin, O’Connor & Ewing.