If you own a condominium or a house with a homeowners’ association, chances are you have monthly dues. And, in all likelihood, you pay them regularly and promptly. But what happens if you fall behind on those dues? Many owners don’t realize if they consistently fail to pay dues, their condominium association (COA) or homeowners’ association (HOA) has the right to foreclose on the property. Here’s some more information about the HOA foreclosure process in DC and how you can avoid dues-related problems.
HOA Liens
If you have not paid your monthly dues and assessments to your COA/HOA, the association can place a lien on your property. The lien ensures your property cannot be sold or refinanced before you have paid off the charges covered by the lien, which may include the unpaid monthly dues, attorney fees, and penalties. Unlike restrictions placed on mortgage companies, there are fewer regulations that prevent an HOA from moving forward with the foreclosure process. Consequently, it is critical to stay current on your HOA dues and to be aware of any and all of your HOA’s internal regulations.
Laws, CC&Rs & Bylaws
In D.C., a COA can add late charges to the monthly dues you already owe. The COA can also charge you interest at either an annual rate of 10 percent or the maximum rate that is permissible for first mortgages in the District. Make sure you are familiar with the covenants, conditions, and restrictions (CC&Rs) and the bylaws for your COA or HOA. In many states, and in D.C., an HOA can foreclose on your property without going through the judicial process. Read your HOA bylaws to understand the steps it would take in a foreclosure and see if they allow for a judicial, instead of a nonjudicial, foreclosure process.
The Saving Homes from Foreclosure Law in D.C. created a mediation requirements for lenders, but it has not affected the ability of COAs and HOAs to foreclose on properties. The D.C. Condominium Act provides a COA/HOA with the legal authority to foreclose on a property for the homeowner’s failure to pay monthly dues, even if the homeowner is current on mortgage payments. A COA can have its lien on your property designated as a super lien. This means that the COA lien would take priority over a first mortgage on the property that was recorded before the date when six months’ worth of unpaid dues became delinquent.
Stopping an HOA foreclosure
As a property owner, you can pay the full amount of any past due fees, penalties, interest, and attorney’s fees prior to the foreclosure sale to stop the process and keep your property. The statute of limitations for COA liens in D.C. requires a COA to initiate the foreclosure process within three years of the date when the COA fees became due. If the COA does not start this process within that time frame, the lien will be extinguished.
It is essential for property owners to regularly pay their COA/HOA fees. If you have issues with payment, be sure to examine the association’s CC&Rs and bylaws and contact a legal professional.
Nolo’s website also offers more information about COA/HOA foreclosures in Washington D.C.
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