Quick Answer
An HOA lien is a claim an eligible homeowners association may assert against property for unpaid assessments, dues, fees, or fines as permitted by the governing documents and applicable state law. HOA liens can affect a property owner's ability to sell or refinance until the amounts are paid.
Properties that are part of a homeowners association (HOA) are subject to the association's governing documents. When the owner fails to pay assessments or violates rules, the HOA may have the right to assert a lien against the property.
Potential Balances That Can Be Included
An HOA lien may include various types of amounts, depending on the governing documents and applicable law:
- Regular and special assessments
- Late charges on unpaid assessments
- Collection costs incurred by the association
- Certain fines imposed under the governing documents
- Attorney fees related to collection (where permitted)
Why Does Title Care?
When a property in an HOA-governed community is sold, the title company typically requires evidence that any outstanding HOA assessments have been paid or will be paid at closing. This is often shown through an estoppel letter or similar document from the HOA stating the amount due. The title company may require this as a title requirement.
HOA Lien vs. Mortgage: Which Has Priority?
The priority of an HOA lien relative to a mortgage depends on applicable state law, the language in the governing documents, and the timing of the lien. In some states, a properly recorded HOA lien for assessments may have priority over even a first mortgage for a limited amount (often a portion of the assessments). In other states, the mortgage generally has priority. Never assume the mortgage automatically wins. The specific priority rules vary by jurisdiction. For more on how priority works, see lien priority explained.
CAN THIS STOP CLOSING?
Yes, an unpaid HOA lien or demand for payment can delay or stop a closing. The title company will require evidence that the HOA's outstanding amounts are paid. See our article on can unpaid HOA dues stop a closing for a detailed discussion.
FAQs
Can an HOA foreclose on its lien?
In many states, an HOA has the right to foreclose on its lien under certain conditions, though the process and requirements vary significantly by state. Some states limit the HOA's foreclosure rights or require specific procedures.
What happens to HOA dues when a property is sold?
Typically, the seller is responsible for dues up to the closing date, and the buyer becomes responsible from that point forward. The amounts are often prorated on the settlement statement.
Does the buyer inherit the HOA's rules?
Yes. When you buy a property in an HOA-governed community, you agree to abide by the governing documents. These restrictions generally run with the land and bind successive owners. See our article on what an encumbrance is for more on HOA restrictions as non-financial encumbrances.