A homeowners association in Georgia has the ability to record a lien on a homeowner's home and then collect by garnishing wages and bank accounts or foreclose. Georgia is not one of the so-called "HOA super lien" states -- the HOA lien does not have priority over earlier recorded liens. For this reason, HOAs in the state typically avoid foreclosure in favor of other collection means.
Why Dues Matter
Homeowner association dues pay for the maintenance and insurance for all common areas of a condominium, townhome or single-family home subdivision that has recorded codes, covenants and restrictions. Many lenders will refuse to write mortgages for properties in HOAs that have delinquency rates of more than 25 percent. The result can be devastating to a community. No one can sell their homes because lenders won't loan there, common areas deteriorate and remaining homeowners face rising dues to make up for the owners who haven't paid.
Georgia HOA Foreclosure Process
In some states, such as Texas, an HOA can foreclose to collect on a recorded lien for any amount of unpaid dues or penalties. In Georgia, there is a $2,000 threshold of unpaid dues, penalties and fees before an HOA can foreclose. While the common foreclosure method in Georgia is a nonjudicial process, an HOA must file a lawsuit to foreclose -- a longer and more expensive process.
About 20 states operate under what is known as the "HOA super lien" rule. This allows HOAs to go to the head of the line for debt collection after foreclosing on a property. In Georgia, however, the HOA lien is most often junior to a first mortgage. No matter who forecloses on the property, the first lienholder is paid first. If a property is worth less than its underlying mortgage, the HOA never gets paid.
Other Collection Means
Because of the cost and priority problems associated with an HOA foreclosure, some HOAs attempt collecting on the unpaid dues through other means such as garnishing wages and bank accounts. The court's approval is required for both processes, but it is often less expensive and more effective than foreclosure.
Mary Gallagher runs Mary Gallagher Planning (mgaplanning.com), an urban planning and consulting business in San Francisco. She is the former assistant planning director for San Francisco and planning director for San Mateo. Gallagher has been writing about real estate, development and land use for numerous websites since 1995. She holds a master's degree in historic preservation planning from Cornell University.