As we await the outcome of contradictory rulings on the Constitutionality of the HOA priority liens, I am reposting the following blog as a reminder of what is at stake for property owners, buyers, investors, and mortgage lenders.
By Deborah Goonan, Independent American Communities
A hot-button issue involving Association Governed Housing – homeowners associations, condominium associations, and cooperative associations – is priority lien status. Currently 22 states, the District of Columbia and Puerto Rico have assessment priority lien statutes. (See the list of states at the end of this article.)
The case for priority liens – the industry perspective
Community Associations Institute (CAI) makes its case for priority lien status of “community associations” in its official Public Policy: (emphasis added)
In order to recover their losses, lenders and associations attach liens to the property and compete in a foreclosure sale for the debts owed. Generally, liens are prioritized by the common law principle, “first in time, first in right.” Under this principle, the mortgage lender who properly records a mortgage always has priority over any association claim. When foreclosure proceedings are instituted, mortgagees are typically always winning bidders…
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