The Fine Was Unfair. Can the Association Put a Lien on My Condo and Drive Me Out?

Got HOA questions? You’re not alone.

Nearly one in three deed holders today live with a homeowners’ association (HOA). Most new houses, along with traditional condo properties, are developed for associations.

HOAs have authority to fine those who defy their rules. Ignore these fines, and you might find a lien on the title one day. Yes, HOAs are well known for placing liens on unit owners’ titles. In some cases, they even foreclose, using these liens as a basis.

What’s the Matter With HOA Liens‍?

Unpaid dues and fines for rule violations can snowball. Additional fees and interest can ratchet up what you owe the HOA. Sometimes, deed holders also get zapped with an association’s legal bills for assessment or violation disputes. And HOAs can file liens on titles for these unpaid debts.

Why is this such trouble for a deed holder? It creates a cloud on the unit’s title. When you go to sell or refinance your unit, an HOA lien will be a barrier until you clear the title.

Typically an association records liens with the county, so anyone running a title search on your unit can find the cloud. (State law might or might not require the recording of HOA liens.)

Meanwhile, the condo office is likely to send you notices and messages and possibly hire debt collectors to go after the unpaid funds.

To detangle the mess, you may need to consult a real estate lawyer in your area. You’ll need a lien release to clear your title.

In the worst-case scenario, you’ll need to fight a foreclosure. Most condo associations are authorized to foreclose on a lien, and to add legal fees to the unit owner’s debt.  

Who Gave the HOA Power to Create a Lien?

Association boards cite their own authority in the Declaration of Covenants, Conditions, and Restrictions (CC&Rs). The Declaration is on record with the state, and has legal force. There are also bylaws and rules for all unit owners to follow, voted on by elected board members.

Each state enacts its own set of condominium laws. These laws generally allow HOAs to put rules on assessments and liens into the HOA’s governing documents. With authority backed by state law, your HOA does have the power to impose a lien for unpaid assessments or fines.

Charges for the following can become “lienable” debts:

• Fines for not following the rules or bylaws. Generally, an HOA mails the unit owner a warning letter if someone is out of compliance with the rules. Next, if the unit owner doesn’t heed the warning (often by a date set forth in the warning letter), there’s a fine.

• Past-due monthly assessments or special assessment charges. HOAs establish and collect monthly assessments. Special assessments occur after an unplanned, urgent expenditure.

Failing to pay fines or overdue charges can trigger a loss of an annual pool pass or some other common benefit. The association could also decide to take legal action to recover the debt, including late fees and collection costs.  

What If I Want to Fight This?

It’s always best to quickly resolve any disputes with the board, keep your title clear, and avoid a court dispute. Litigation can dent your unit’s marketability. Why? Because lawsuits can hold up financing when people attempt to sell and buy the homes on HOA properties.

But, you might ask, what if the fine is unfair or unreasonable? Or what if the board simply has no evidence against you? You would take the following steps:

• Be sure you have a clear statement in writing from the board. What is the penalty for? What is the board demanding from you?

• Review your condo’s packet of governing documents. Find all mentions of the violation at issue. Are you sure you aren’t in violation? Is there clear unfairness in the way you’ve been singled out?

• Gather proof of your position, and request the opportunity to appear at an upcoming HOA board meeting to appeal the board’s action.

Once you’ve been heard out at a meeting, the HOA would typically:

• Agree with you and drop any penalties and fines; or

• Let you off the hook (especially if the board members believe you acted on account of exceptional circumstances); or

• Compromise by discounting your overdue payments, or offering an interest-free payment plan; or

• Determine that their position holds up, and continue pursuing you for the charges owed.

To avoid the time and expense of a court case, a compromise can be the best route for all involved. A board that continues to press its position should be transparent, and  communicate its position reasonably. Boards must adhere to any fee or penalty rules set forth in their governing documents. They may not fine you a higher amount than your state cap (if there is one).

In short, your pushback might not work out. Sometimes, the squeaky-wheel method works. Other times, boards refuse to budge. If you believe the board is acting against public policy, check your state community affairs department’s website for channels to file a complaint.

How Can I Get My HOA Board to Listen?

Even though you believe the board has made unreasonable demands, there are good reasons to address the board with courtesy and patience. For one, the board is made up of volunteers — other deed holders, like you. It’s in your common interest to maintain the safety and value of the property. By acknowledging and respecting their roles, you make room for the board members to listen to what you’re saying.

Keep these other basic strategies in mind as well:

• When you receive communications, reply in writing — to document your position and theirs.

• Rather than argue over whether a rule is justified or fair, focus on winning reconsideration of the penalty you personally face. You can always start a petition separately for consideration of a rule change.

• Keep paying your monthly housing-related bills, and your HOA dues, unless you have hired a lawyer who advises you otherwise.

If all else fails, and you do take an HOA to civil court, you’ll face court costs and lawyers’ fees. An experienced and frank condo law expert will tell you if litigation is more likely to be worth it than not.

Can an HOA Foreclose and Resell My Condo?

Check your document binder. As long as the Covenants, Conditions, and Restrictions (CC&Rs) give the HOA the authority to foreclose on the lien, it can.

Some states give HOAs “super-lien” powers. Super lien states boost HOA interests, so that an HOA can get repaid before the mortgage lender does.

For the process, check the HOA bylaws. Under your state’s law, the HOA might have a series of legal hoops to clear before foreclosing. Or you might have recourse to alternative dispute resolution to contest the lien before foreclosure can happen in court. And if the HOA sits on its rights for too long, the lien could be terminated, so there will be no basis to foreclose.  

Also, some states only allow HOA foreclosures where the deed holder has left charges unpaid for a year or more, or the total unpaid charges exceed a certain amount.  

On the other hand, some states may let HOAs foreclose over any amount of unpaid charges. And in some states, HOAs may initiate non-judicial foreclosures that bypass the court foreclosure process.

If Things Do Get to the Foreclosure Stage…

Has the HOA notified you it will initiate a court action to foreclose on the lien? You might be able to successfully defend your unit against the threatened foreclosure if you can argue that:

• The property’s governing documents don’t authorize the HOA’s actions in your case.

• The HOA’s actions go against some aspect of the state’s condominium laws.

• The association charged you bloated or unreasonable fees, or intends to use the funds for improper purposes.  

A local lawyer experienced with foreclosures can give appropriate guidance in specific cases. Note that states change their laws from time to time. What happened to a neighbor years ago might not be valid now.

An experienced lawyer will also know if there’s a newly decided court case in your state that changes the game for yours.