With foreclosures on the rise, more homeowners have started looking at the circumstances that lead to foreclosure. While mortgage shortfalls make up the majority of foreclosure cases, some foreclosures happen for other reasons.
An HOA lien can lead to foreclosure as well. How does a house end up with such a lien, though? How can homeowners get out from under such a lien?
If you're a Glenview homeowner who doesn't know about the lien process, take some time to review this information on liens. It could mean the difference between keeping your home and an HOA foreclosure.
What Are HOA Liens?
An HOA lien occurs when a homeowners association places a lien on a residential property. Liens indicate that the house carries a debt to a major creditor and can make it difficult to sell your home. While most liens have to do with property taxes or mortgages, HOA management can also seek a lien on your home.
Why Do I Have an HOA Lien?
An HOA lien starts with unpaid debt. To operate communal services and locations, an HOA can levy fees called assessments. If your assessments go unpaid, the HOA can choose to place a lien on the home.
Homeowners often handle their debt well before it leads to a lien. The HOA will start by sending letters and making phone calls rather than seeking to place a lien on the home.
Does My HOA Want to Foreclose?
Even once the homeowners association places a lien on the home, foreclosure will still serve as a final recourse. A foreclosure leads to the HOA taking possession of the home, and for an HOA, properties seldom lead to profits. Owning more homes doesn't help the HOA.
How Do I Remove an HOA Lien?
To remove an HOA lien, you need to settle the debt with the HOA. A lien indicates that the HOA has an interest in the home and any proceeds from its transfer. If they have their money, they don't have an interest.
Whether you just have past-due debt or a lien on the property, contact the HOA about finding an agreeable payment plan. State law and your HOA agreement will set out the rules for settling HOA debt. HOA debt doesn't need to lead to foreclosed homes.
What's Lien Priority?
Many homeowners end up with multiple types of liens on the property. Lien priority dictates who gets paid in the event of a foreclosure. If you have multiple liens, review your HOA documents to check the HOA's lien priority.
HOAs and Homeowners: Know Your Rights
Whether you've just joined the board of an HOA or have an HOA lien on your home, you need to know how to approach assessment-related debt. For a homeowners association, knowing the law can mean the difference between collecting and not collecting on debt. For a homeowner, it can mean the difference between staying put and moving.
We know HOA regulations inside and out. Our company provides many services, including accounting and reporting. If you own or operate a rental property in the Glenview area, give us a call and see what we can do for you.