Q: We tragically lost our home in California to foreclosure in 2008, after doing everything we could to try to keep it. A check was given to us in exchange for the keys. Sometime later we received a lien for the back HOA dues owed. Is that legal?

If the bank takes back the home, does that mean that the HOA dues would be paid by the bank or negotiated with the buyer? –Laurence

A: Sorry to hear that you’ve had such a tough time, Laurence. First, let me explain one item of your letter that’s somewhat unrelated to your actual question for the readers I know are wondering. Many banks offer foreclosed homeowners a move-out assistance payment known in the industry as "cash-for-keys" to leave the property in good condition when they vacate. It sounds like that’s the check you received.

But onto your question — unfortunately, your situation is quite common. Many foreclosed homes in developments managed by homeowners associations (HOAs) are months’ or years’ worth delinquent on their HOA dues at the time of the foreclosure.

Given that foreclosure takes six months or longer in most areas, the vast majority of owners facing foreclosure are very aware that it’s coming. The vast majority of these people stop paying their property taxes and HOA dues when they realize that they’re going to lose their home.

The type and extent of HOA collection efforts, which are legal, depends on the terms of any agreements that you signed when you bought the property, the laws of your state, and the factual scenario surrounding your home, especially after you lost it. Let me outline the landscape of this for you.

Virtually everywhere, HOAs are authorized under state law and the terms of the complex or subdivision’s covenants, conditions and restrictions (CC&Rs) to place a lien on the property once your dues fall delinquent by a certain amount (usually a certain time period, like 90 days behind).

However, this lien is placed against the home itself, not your personal property, salary or bank account.

The HOA may require the lien to be removed before the title to the property can be transferred to a new buyer, which would mean either the bank or the next buyer would have to pay the lien off to close the deal (many banks do in fact pay these types of liens off when they resell a property after foreclosure).

However, you should be aware that it’s totally in the bank’s own discretion whether or when it tries to sell your former home. In some instances, the bank does not even attempt to resell the property for months or even years following a foreclosure.

And it may do nothing to pay off the delinquent dues until it absolutely has to — which is when escrow closes on its resale of the home.

Under the terms of many HOA agreements and CC&Rs, the HOA may pursue a variety of traditional collection efforts — including siccing a collection agency on you or taking you to court — until the back dues are paid. The HOA doesn’t care who pays them — you, the bank or even the eventual buyer — but it does have the right to take legal means to collect the money until someone pays.

Your next step should be to closely read the lien you received a copy of — it is probably a lien against the home, not a levy against your personal property or bank accounts. Paying the lien off to clear the property is no longer your responsibility — the bank will deal with that.

However, do be aware that the HOA can and may pursue you for the delinquency personally, if it chooses to do so before someone else pays it.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×