I received a correspondence from my mortgage company that my homeowners association filed a lien on my property for outstanding assessments. I never received notice from my association.
Admittedly, I fell behind on my HOA assessments due to tough financial times when I lost my job, but is it legal for the association to lien my house? What are my rights, and what do you recommend I do to remedy this situation? — Chris H.
These are tough times economically for many Americans, and I regularly work with homeowners who fall behind on their association’s assessments, so know that you are not alone.
Associations have not only the right, but the obligation to aggressively pursue delinquent accounts.
They are permitted to not only place liens on properties, but also to pursue more serious actions, such as judicial or nonjudicial foreclosures to secure their financial interest in outstanding fees and assessments.
Having said that, the law provides a strict process that an association must follow to be able to legally place a lien on a homeowner’s property.
Delinquency or collection policies differ from one association to the next, so I encourage you to obtain a copy of your association’s policy.
Associations are required by law to mail a certified prelien letter to the delinquent homeowner at least 30 days prior to filing a lien on a property. Typically, prelien letters are sent out at least 30 days after your account officially becomes delinquent, so if your assessments are due on the 1st of the month, and late after the 15th, a prelien letter will typically be sent out on the 45th day, and a lien may be approved on or after the 75th day the account has become delinquent.
If the association fails to send out the certified pre-lien letter 30 days before approving the filing of a lien, the lien may be null and void. If an association attempts to send a certified prelien notice, and it is returned undeliverable, the association must also send a prelien notice via regular first-class mail to satisfy the notification requirement.
This legal process helps ensure homeowners don’t simply deny receipt of a certified letter to avoid having a lien placed on their properties.
In the interest of mitigating delays in pursuing delinquent assessments and ensuring that the legal notification requirements are met, our management firm will proactively mail the prelien notice certified and first class mail simultaneously.
Additionally, liens must be approved at a board meeting in general/open session and reflected in the meeting minutes. To protect the privacy of delinquent homeowners, associations will refer to delinquent accounts by either the association account number or the assessor parcel identification number.
As a homeowner, you have the right to request evidence of the notice, including proof that the certified prelien was sent/received and that the association followed the proper timeline and steps outlined above.
You also have the right to request, and the association has the obligation to provide you with, the meeting minutes reflecting the board vote to place a lien on your property. The law requires the minutes be provided to you within 10 days of submitting a written request.
Assuming that the correct legal procedures were followed, I suggest contacting your board of directors or your association’s professional management firm to request a payment plan to begin satisfying your debt.
Although the lien will most likely remain in place until your debt is paid in full, once a payment plan is approved you will typically stop accruing late charges and interest. More often than not, a board of directors may also agree to waive a portion of your late fees and penalties once your debt is paid off, assuming that you abide by the payment plan.
Associations are afforded many tools to pursue delinquent accounts, including not only liens, but also taking homeowners to small claims court and even foreclosing on properties to secure the association’s financial interest.
As such, it is important that you contact your association’s board of directors and work to pay down your delinquent balance. I would also encourage you to request a meeting with your board in person at a private executive session meeting to discuss what they consider to be acceptable payment plan options.
More often than not, boards strive to work with homeowners who have fallen behind on their assessments, so I am confident that if you meet with them and propose a reasonable payment plan, you will reach a satisfactory arrangement.