When you live in an HOA, you must abide by a set of CC&Rs, or rules, put together by the community, and pay annual HOA fees to pay for the upkeep of shared spaces.
For 75 million people across the USA, these are small sacrifices when compared to the benefits of living in one of these communities. These perks include appealing amenities, a warm sense of community, and stable home prices.
An HOA board can act against anyone who doesn't comply with the rules by levying fines and late payment fees against them. They may even place an HOA lien on their property.
Read on to find out more about this severe consequence of non-compliance with HOA regulations.
What Is a Lien?
A lien is a claim against a homeowner's property. There are two types of liens, namely voluntary and involuntary liens. A mortgage is an example of a voluntary lien, while an HOA lien or tax line is involuntary.
An HOA lien may comprise past-due HOA fees, late payment fees, and fines. It clouds the home's title, making it more difficult to refinance or sell it.
Failure to pay an HOA lien means the HOA can foreclose on your home. You could lose your home, even if your mortgage payments are up to date.
The proceeds from the sale go towards settling the HOA lien, the mortgage, and any other junior liens held against the property. In Arizona, HOA liens have super lien status, which means money from the sale goes toward paying these liens before all others, including the mortgage.
If the proceeds from the sale don't cover the outstanding balance on the homeowner's mortgage, they still need to pay the balance outstanding on their mortgage.
How to Get Rid of an HOA Lien
By far the best way to avoid having your home foreclosed on by your HOA is by paying your dues on time. If you're experiencing financial difficulties, don't ignore your HOA board's requests for payment.
Speak to the HOA manager about setting up a payment plan to catch up with the arrears on your account. Once it's in place, the only way to get rid of an HOA lien is by paying the full amount owed.
The HOA cannot start foreclosure proceedings unless you've been delinquent in your payments for a year or if the amount exceeds $1,200. By making a payment arrangement, you can help postpone this eventuality.
Once you've paid the outstanding amount in full, the HOA will remove the line from your property.
Boost Your HOA Fee Collections
As an HOA board member, the best way to avoid the unpleasantness of imposing an HOA lien on one of your residents' properties is by encouraging them to stay up-to-date with their payments.
PMI Phoenix Valley can help implement efficient HOA management, consistent maintenance, and effective fee collections in your community. These aspects all help to encourage HOA fee payments.
We are backed by over 20 years of real estate management and committed to delivering a unique blend of services suited to your HOA community.
Discover an easier way to manage your HOA community in Phoenix, Arizona, today.
