One in every 4,004 homes in Alabama ends up in foreclosure. The state rates 16th in the country. While an HOA foreclosure is rare, it is still possible. Anyone living in an HOA community should be aware of how it works.
If you fail to pay your homeowners' association fees, the HOA can put a lien on your home. This action makes the homeowner vulnerable to foreclosure.
Are you considering buying a property in an HOA community in Hoover, Alabama? Keep reading to learn everything you need to know about HOA foreclosure.
What Happens If You Fall Behind on HOA Dues?
If you have not paid your HOA fees and assessments in the state of Alabama, the HOA can put a lien on your home.
As a homeowner, the HOA can also charge you late fees, fines, interest, attorney's fees, and other fees. In the end, the HOA board may choose to foreclose its lien.
When this happens, it can trickle over to other liens, like the mortgage on the home.
Understanding HOA Liens
If you own an HOA property, failing to pay your HOA assessment and monthly or quarterly fees comes with consequences. A lien attaches to your property under the Alabama Homeowners' Association Act.
Written Notice
The HOA must give the property owner written notice of the assessment and lien. It can be hand delivered or sent using first-class mail.
Recording the Lien
The HOA has to record the lien in the office of the judge of probate within one year from the date the assessment was due.
At least 30 days before recording the statement of lien, the HOA must give the owner written notice of the filing by certified mail. (Ala. Code § 35-20-12)
Removing the Lien
To remove the lien, the homeowner has to settle the debt with the HOA. The settlement usually includes the original assessment plus fines, interest, or the penalty for failing to pay on time. Sometimes, attorney fees will be tacked on as well.
Even in cases where the HOA does not foreclose, the lien will still cause you to have a difficult time selling the home because of the lack of a clear title.
Does an HOA Have the Authority to Foreclose?
Alabama State Law, under the Alabama Homeowners' Association Act, allows foreclosure on an HOA lien. In the county where the property is located, the HOA must make notice of the sale once per week for three consecutive weeks.
Avoiding HOA Foreclosure
Residents who choose to live in an HOA community must take on the responsibility of abiding by the rules and paying their HOA fees and assessments. This is the best way to avoid HOA foreclosure.
Homeowners' associations manage HOA fees and other aspects of the community, like caring for the common areas. Does your HOA need the help of an HOA management company?
We at PMI Birmingham Region specialize in Association Management for Home Owner Associations (HOA) in Central Alabama. Contact us through our website or by calling 205.583.2500 to set up a consultation.
