Delinquent Owner: Can the Homeowners Association Foreclose?

The short answer is yes, but it depends on the amount owed and it requires compliance with a series of rules.

Because Homeowners’ Associations (“HOAs”) depend upon the timely payment of owners’ assessments to function, courts recognize the right of the HOA to collect those assessments. When an owner is falling behind, it can have disastrous effects, particularly for small HOAs.

An assessment becomes delinquent if not paid within 15 days after its due date. The delinquent assessment, plus late charges, interest, costs of collection or related charges, will become a lien on the delinquent owner’s condominium unit on the date the HOA records a Notice of Delinquent Assessment with the Recorder’s Office. The HOA may only foreclose on a lien that exceeds $1,800.

Here is a quick overview of the various steps an HOA must comply with to proceed with non-judicial foreclosure:

  1. Accounting: Prepare clear accounting and an itemized statement of what is owed, including late charges, interests, and collection costs.

  1. Pre-Lien Letter: At least 30 days prior to recording the lien, the HOA must send to the delinquent owner by certified mail certain notifications mandated by statute, including a general description of the HOA collection and enforcement procedures, an itemized statement, the right to request a payment plan, the right to dispute the debt, and the right to request alternative dispute resolution.

  1. Meet and Confer: Prior to recording the lien, the HOA shall offer, and if requested by the delinquent owner shall participate in, alternative dispute resolution.

  1. Board Resolution: The decision to record the lien shall be made by the Board of Directors by majority vote in an open meeting in accordance with the Bylaws. The vote needs to be recorded in the minutes of that meeting prior to recording the lien. The name of the delinquent owner must be kept confidential. The HOA shall refer to the matter using the unit’s APN.

  1. Notice of Delinquent Assessment: The lien is created by the recordation of the Notice of Delinquent Assessment. The HOA may not foreclose until the delinquent assessment is at least $1,800 or the delinquency is at least 12 months old.

  1. Lien Release: If the delinquent owner pays the sums specified in the notice of delinquent assessment, the HOA shall record a lien release within 21 days of the payment and provide notice to the owner that the delinquent assessment has been satisfied.

  1. Dispute Resolution: Prior to initiating a foreclosure, the HOA must offer to the delinquent owner and, if so requested by the owner, participate in alternative dispute resolution. The decision to pursue dispute resolution or a particular type of alternative dispute resolution is the choice of the delinquent owner.

  1. Decision to Initiate Foreclosure: At least 30 days prior to the public sale, the HOA must vote to approve the foreclosure of the lien. The decision to initiate foreclosure must be made in executive session by the Board of Directors by majority vote. The vote must then be recorded in the minutes of the next open meeting of the Board. The name of the delinquent owner must be kept confidential. The HOA shall refer to the matter using the unit’s APN.

  1. Decision to Foreclose and Notice of Default: The HOA shall provide notice of the decision to foreclose to the owner by personal service. The HOA shall also serve the notice of default on the delinquent owner by personal service and shall record it with the Recorder’s Office.

  1. Notice of Sale: Not earlier than three months after the filing of the notice of default, the trustee designated to sell the condominium unit shall give notice of sale.

  1. Right of Redemption: The delinquent owner may redeem his unit from a foreclosure sale for 90 days after the sale. The sale of the condominium unit must include a statement that the property is being sold subject to this right of redemption.

The foreclosure timeline is approximately one year.

For assistance with issues related to non-payment of HOA dues, you may contact Gael Bizel-Bizellot at Zacks & Freedman, PC for guidance. Contact us at your convenience to request a consultation.

Neither this website nor this post are intended to create an attorney-client relationship.