Homeowner's associations have the power to sue you for unpaid associations fees and dues and, in the worst case, they may be entitled to place a lien on your home for the money you owe. Horror stories abound of homeowners who have had their homes foreclosed and sold out from under them because of liens placed by their homeowners’ association. However, there are things you can do to remove the lien, either because it is invalid or because you have paid off the debt you owe.
Is the Lien Valid?
Check the validity of an HOA lien. This depends on several factors, including the contents of the HOA agreement and other documents. HOA liens may be invalidated for a number of reasons, including whether the association makes use of dubious accounting procedures.
Are There any Other Liens?
Identify superior liens on the property. In most states, HOA liens are inferior to first mortgages and government tax liens, although they are superior to second mortgages and mechanics liens, or liens for unpaid repair work. You may be able to remove an HOA lien by proving it invalid because of the existence of a superior lien, or by showing a court that the merits of the lien are questionable.
Pay Off the Debt
Repay the HOA lien in full, depending on the amount of the lien. If the lien is valid and you can afford to pay it, it may prove less costly than trying to fight it. For example, the woman in Tampa, Florida, may have found it worthwhile to pay the outstanding fees instead of losing her home.
File a Counter Claim
Ask yourself, can you file a counter claim? You may be withholding payment in good faith because the HOA has not upheld its side of the bargain, for example, by failing to maintain the common areas, thereby entitling you to offset some of the outstanding payments. Consult with an attorney to understand the legal position.
Defend the Lawsuit
Go to litigation to oppose the claim. Verify whether the HOA’s accounting procedures are accurate by requesting to view the books, and take them to an accountant to ensure that the amount of the lien is justified. A lawyer experienced in HOA liens will be able to identify whether you have a chance of winning in court.
Wait for the Lien to Expire
In some states, for example in Florida, HOA liens may become uncollectible over time because of the statute of limitations. In other states, the HOA has three years in which to foreclose against the lien or it expires.
File for Bankruptcy
The final option is to file for Chapter 13 bankruptcy. If the property is worth less than the amount owing on the first mortgage, the homeowner has no equity in the property. Since the first mortgage holder is the senior liens, an HOA lien may be written off under these circumstances.
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