The most important thing you can do is to understand your rights when your HOA is threatening to foreclose on your home. In Arizona, an HOA can foreclose on your home under certain circumstances, but only after they have followed the necessary legal procedures.
If you fail to pay your assessments, the HOA may be able to foreclose on your home. The HOA automatically has a perfected lien against your home for unpaid assessments. They can foreclose on that lien if the unpaid assessments are for at least $1,200, or if the unpaid assessments are at least one year past due, whichever is earlier.
But this is where it gets complicated. If the HOA is claiming you owe more than $1,200 (in order to reach the foreclosure threshold), the HOA cannot tack on late fees, collection fees or attorneys’ fees to meet that amount. If you are more than $1,200 past due on assessments, the HOA can move to foreclose, and any late fees, collection fees or attorneys’ fees are recoverable in the foreclosure action. However, if you pay off previously-unpaid assessments, but not any additional late fees or other related charges, the HOA still maintains a lien against your home for the unpaid late fees/charges, but they are not able to foreclose on your home solely for the unpaid late fees/charges. While these laws are intended to protect you the homeowner, the intricacies can be difficult to navigate
To be clear, the assessments are more commonly known as the ‘monthly dues’ that you pay to the HOA. Assessments do not include any fines or penalties the HOA charges for violations of the CC&Rs. For example, if the HOA fines you for not picking up after your dog, or painting your fence an unapproved color, they cannot foreclose solely for a failure to pay those fines. This does not mean that you don’t have to pay those fines. The HOA can certainly sue you for failing to pay those fines, and obtain a judgment against you.
If the HOA obtains a foreclosure judgment against your home, they can then tack on any other fees/charges as part of the foreclosure. For example, the fines and penalties discussed in the paragraph above can be included/recovered during the foreclosure process. This means that if the HOA forecloses and your home is sold, the HOA will be paid out of the sale proceeds (i.e., your equity in your home) for any money you owe for assessments, fines, late charges, attorneys’ fees, costs, etc.
You do not want this to happen. That’s why it is important to have an experienced HOA attorney assist if your HOA is threatening a lien or foreclosure. At Lubin Pham + Caplin LLP, we will work tirelessly to ensure that your rights are protected, and to hold your HOA accountable for failing to comply with any legal requirements.
