Are you considering buying one of the 893,000 homes located in HOAs in Colorado? If so, you must research the relevant HOA fees before you commit.
These monthly payments contribute toward the upkeep of the HOA community and all the convenient facilities it contains. They're separate from your mortgage payments.
If you don't pay your HOA fees, the association could place an HOA lien on your property. Keep reading to find out more about these penalties and how they can affect you.
What Is an HOA Lien?
Collecting HOA fees is part of the HOA board's responsibilities, and HOA liens are one of the most effective ways to ensure homeowners pay their dues on time.
An HOA lien is a legal claim against a property, similar to other types of liens, like tax liens. Having a lien against your property clouds the title and can make it difficult to sell or refinance a home.
The lien amount may include:
- Overdue HOA fees
- Interest charges
- Collection costs
- Late charges
All HOAs have a set of regulations called CC&Rs. These include things like pet rules, architectural guidelines, and rules for using common areas.
If you violate these regulations, the HOA manager will give you time to rectify the matter. If you don't repair the situation in time, they can impose a fine.
HOA liens may also include amounts due for outstanding fines.
Can You Avoid an HOA Lien?
The most effective way to avoid an HOA lien is to pay your dues on time. If you're experiencing unexpected financial difficulties and you can't pay your HOA fees, you must reach out to your HOA board as soon as possible.
The State of Colorado has strict criteria about how an HOA board may approach homeowners regarding overdue HOA fees. You may be able to set up a payment arrangement to help you settle outstanding fees.
Once you've paid off the lien amount, the HOA will record a lien release with the country recorder's office. They usually have 21 days to do this after you've paid.
If you don't stick to your payment arrangement or choose to ignore your outstanding fees, the HOA can foreclose on your home, even if your mortgage is paid up to date.
How Does HOA Foreclosure Work?
Foreclosure on an HOA property with overdue liens is usually a judicial process. In Colorado, HOA liens are super liens, which means they take preference over your mortgage.
As the first lender, you're still liable for the balance of your mortgage payments.
Apart from causing you to lose your home, a foreclosure can harm your credit record. So, if you want to enjoy the benefits of HOA living, you must seriously consider whether you can afford to pay the HOA fees before you commit.
How Can HOA Boards Collect Fees Without Resorting to HOA Liens?
PMI Northern Colorado has years of experience in managing HOA communities in Fort Collins. We can help your HOA board avoid the unpleasantness of HOA liens and foreclosures by compiling cost-effective budgets and collecting HOA fees promptly.
We're familiar with all the latest HOA laws to ensure a smooth process if you have to impose HOA liens or proceed with an HOA foreclosure.
Call us to discuss your association management needs in Fort Collins, Colorado.