Understanding the Basics of an HOA Foreclosure

Understanding the Basics of an HOA Foreclosure

Foreclosure rates are up 22% from last year, filling many homeowners with dread. Some people don't understand that it's not just a bank foreclosure they have to worry about. Their homeowner's association can foreclose a property as well.

The HOA can get a lien on your home if you fail to pay the dues or assessments. Defaulting on the payments you agreed to make may result in an HOA foreclosure.

We understand that the idea of losing your house is incredibly stressful. Here's what you need to know to prevent it from happening.

What Is an HOA Foreclosure?

Your HOA collects fees and assessments from residents in the community to cover maintenance, repairs, upkeep, etc. These fees are meant to help keep a community of homes in good shape.

However, there are times when a homeowner may fall behind and fail to meet those payment requirements. Maybe you're managing multiple properties and experiencing a vacancy loss, which may have impacted your finances.

Regardless of the reason, homeowners that fail to pay fees or assessments on time may face legal action.

A homeowners association can take civil action to recover the debt owed to them. They can get a lien on your house or condo and may foreclose on the property.

Keep in mind that some states have due process laws in place that impact an HOA foreclosure. For instance, there may be a certain minimum amount of unpaid dues required before the homeowner's association can foreclose. There might also be rules in place to give homeowners some time to pay back the debt.

What Are the Laws in Texas?

Your HOA can get a lien on your property and charge you for late payments (fees, interest, etc.) Your homeowner's association can also foreclose the lien. However, you may redeem the property after the foreclosure.

HOA boards each have different ways of handling overdue assessments. However, it's likely they will try to collect the debt using traditional methods first before taking legal action. You may receive letters in the mail or phone calls reminding you to pay.

A homeowner's association can reach out to a county recorder and get a lien on the property. Your property can also be foreclosed, even if you have a mortgage. They may choose a judicial or non-judicial foreclosure.

Usually, an HOA must send a written notice to a resident within a certain timeframe and before starting the process.

A lien prevents someone from selling the property. Homeowners can get rid of the lien by paying their delinquent fees and assessments as well as any interest and penalties.

You Have Options

If you're facing an HOA foreclosure, you have options. Pay the fees and assessments back immediately if possible or reach out to your homeowner's association to discuss the situation. If this is a temporary financial setback, you may be able to negotiate.

PMI makes it easy to manage your HOA dues. Our homeowner portal lets you access your account history, make payments in several convenient ways, and much more. Check out our homeowner resources to see how PMI can help you.