Your HOA can foreclose on your home

By Deborah Goonan, Independent American Communities


Did you know that your homeowners’ or condominium association can foreclose on your home for non-payment of assessments?

Apparently, many homeowners are completely unaware of this fact.

When you purchase a home in an Association-Governed Community, you effectively agree to mandatory membership and your obligation to pay your assessments (“dues”) in full and on time. If you fall behind on those payments, your HOA can place a lien on your property.

Some owners think that the lien will simply be paid off when they choose to sell their home. But your association has the legal right to foreclose on your home to collect on that lien.

In one recent case in Port Orange, Florida, the Waters Edge HOA foreclosed on a home worth an estimated $300,000 over a debt of less than $2000. The home was sold at auction to an investor for $175,000. After the HOA gets its money, and legal costs are paid, the family will receive $170,000.

There was no mortgage on the property, so these homeowners just lost over $100,000 in equity.

Action 9: HOA sells Port Orange family’s home over $2K debt


A few additional points for the reader to consider:

  • HOA foreclosure is more common than the industry would have you believe. A Google search on the internet will reveal many similar stories, with some homeowners losing their homes over a few hundred dollars.


  • The process of HOA foreclosure varies by state. In about half of the US, the HOA can foreclose non-judicially, meaning that the matter does not have to be heard by a judge prior to the auction.


  • In most states, there is no law that sets a minimum bid for a foreclosed property at or near the market value of the home or condo.


  • Many homes foreclosed by Owners’ Associations have no mortgage. That can result in a windfall for the real estate investor.


  • There is nothing to stop the HOA or affiliates of HOA Board members or developers from bidding at its own foreclosure auction.


  • If your HOA issues a fine for a real or perceived violation of the covenants, restrictions, or rules, and you fail to pay that fine, beware. Your next regular assessment payment may be applied to the fine first, making you delinquent on assessments, and vulnerable to lien and foreclosure.


  • Even filing for bankruptcy cannot prevent your HOA from foreclosing on your home.


  • As pointed out in the report linked above, if you agree to a payment plan, the HOA is prevented from foreclosing.


Want to learn more? See links below for more information.


Additional Reading:

Not So Neighborly Associations Foreclosing On Homes


Foreclosures by homeowners’ associations rising as their financial condition worsens

Foreclosures by Homeowners’ Associations Rising as Their Financial Condition Worsens


Unpaid HOA Assessments and Your Bankruptcy or Foreclosure


State HOA Foreclosure Laws





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