Can an HOA Foreclose on a Property?

A lien is a claim or legal right that an entity has against someone else’s property or assets. A lien is used as security for payment of a debt or obligation. When an HOA puts a lien on a property, they are essentially saying that the owner owes them money, and if they do not pay it back, then the HOA can take ownership of the property. This could be dues, fees, or assessments that have gone unpaid. The amount owed must be paid before any sale of the home can take place and it becomes part of the title record for the house.

In most cases, an HOA will foreclose on a property due to unpaid assessments or dues owed by the owner. Assessments are fees charged by HOAs for services provided to homeowners, such as lawn care, snow removal, and security. If these assessments are not paid in full and on time, then the HOA may opt to put a lien on the home and eventually foreclose if necessary.

When an HOA wants to foreclose on a property due to unpaid assessments or dues, they must first obtain a court order granting them permission to do so. This court order gives them the right to put their own foreclosure notices up and auction off the house in order to collect what they are owed. The proceeds from this auction must be used to pay off any outstanding debts owed by the homeowner and any costs associated with obtaining the court order itself. Any remaining funds after this will go towards reimbursing other affected parties.

There are, however, limitations on an HOA foreclosing a property in Maryland. An HOA can only foreclose on a property that consists solely of:

• Past due assessments or dues, plus interest.
• Reasonable costs and attorney fees directly related to the filing of the lien.

Both conditions must be met.

Ocean City HOA Lawyers at Oliveri & Larsen Can Help You With Your HOA

If you need legal help with your HOA, speak with one of our Ocean City HOA lawyers at Oliveri & Larsen. Complete our online form or call us at 410-295-3000 to schedule a consultation. Located in Annapolis, Maryland, we serve clients in Ocean City, Anne Arundel County, Baltimore County, Baltimore City, Calvert County, Harford County, Howard County, Queen Anne’s County, St. Mary’s County, Worcester County, Kent County, and the upper and lower Eastern Shores of Maryland.