Are you in charge of an HOA that has members who aren't paying their dues? This can be a huge inconvenience, and it can truly ruin an HOA budget. Most new builds are in HOAs, and many new homeowners aren't sure what that means for them, and as a result, they may fall behind on payments.
This could lead to an HOA lien, or worse, foreclosure.
But what is an HOA lien? Why does it happen, and what does the process look like? Read on to learn all about it.
First: What Is an HOA Lien?
An HOA lien, or Homeowners' Association lien, is a legal claim that a homeowners' association (HOA) places on a property when the homeowner fails to meet their financial obligations to the HOA. In other words, if the homeowner isn't paying the dues that are granting them the HOA benefits, the HOA can take legal action.
Homeowners' associations are responsible for maintaining and managing common areas and amenities in a residential community. These include things like landscaping, security, and shared facilities. To fund these services, homeowners have to pay regular fees, otherwise known as HOA dues or assessments.
If a homeowner isn't paying, that's not fair to the other members of the HOA.
Because homeowners can't be "evicted" from HOA communities (because they own their homes), they may think that there's no real negative outcome that can come from not paying. However, this isn't the case.
What Happens When an HOA Lien Is Placed?
So what happens when an HOA places an HOA lien on a homeowner? It depends, but this is the general sequence of events.
First, the HOA will send a notice to the homeowner. This notice will inform them of the overdue amounts and allow them to pay the outstanding dues. The HOA operates under the assumption that nonpayment was the result of a simple mistake.
If the homeowner does not pay the outstanding amounts in time, the HOA may record a lien against the property with the city of Pittsburgh. This lien serves as a legal claim against the property. It can affect the homeowner's ability to sell or refinance the property, so this will get their attention.
The lien itself includes the unpaid HOA dues, late fees, interest, and any collection costs. The specific terms and procedures for placing a lien can vary depending on the HOA.
Now, if the homeowner continues to not pay their dues, the HOA may take further legal action. This could lead to a foreclosure sale of the property to satisfy the outstanding debt. It's not uncommon to see foreclosed properties within an HOA community.
Pay Your HOA Fees
If you live in an HOA community, it's essential that you pay your HOA fees if you want to avoid an HOA lien. Living in an HOA comes with many benefits, but you can only take advantage of those benefits if you're willing to contribute.
Are you an HOA board member in Pittsburgh who's feeling overwhelmed? It's time to invest in professional HOA management with PMI: The Burgh Property Management. Learn more about how our team can help your HOA community today.
