HOA dues play a crucial role in maintaining the community's common areas, such as landscaping, recreational facilities, and shared infrastructure. These fees are typically collected monthly, and it's the responsibility of each homeowner to ensure timely payments. Failing to pay your dues can lead to serious consequences, including the risk of foreclosure on your property.
When a homeowner consistently fails to pay their monthly dues, the condominium association (COA) or HOA can place a lien on the property. This lien prevents the property from being sold or refinanced until all outstanding charges, including unpaid dues, attorney fees, and penalties, are paid off.
Unlike mortgage companies, HOAs face fewer regulations when it comes to initiating the foreclosure process. As such, it's crucial to stay current on your HOA dues and be familiar with your association's internal regulations.
In Washington DC, a COA can impose late charges on top of the unpaid monthly dues. The COA can also charge interest at an annual rate of 10 percent or the maximum rate allowed for first mortgages in the District. To understand your rights and responsibilities, make sure to familiarize yourself with your COA or HOA's covenants, conditions, and restrictions (CC&Rs), as well as the bylaws.
In many states, including DC, an HOA can foreclose on a property without going through the judicial process. Review your HOA bylaws to understand the foreclosure process and determine if it allows for a judicial, rather than nonjudicial, foreclosure.
The Saving Homes from Foreclosure Law in DC established mediation requirements for lenders, but it doesn't affect the ability of COAs and HOAs to foreclose on properties. The DC Condominium Act grants COAs and HOAs the legal authority to foreclose on a property if a homeowner fails to pay their monthly dues, even if they are current on their mortgage payments.
In some cases, a COA can have its lien designated as a "super lien," which takes priority over a first mortgage recorded before the date when six months' worth of unpaid dues became delinquent.
As a property owner, you can prevent foreclosure by paying the full amount of past-due fees, penalties, interest, and attorney's fees before the foreclosure sale takes place. The statute of limitations for COA liens in DC requires a COA to initiate the foreclosure process within three years of the date when the fees became due. If the COA fails to start this process within that timeframe, the lien will be extinguished.
To avoid issues with payment, be sure to examine your association's CC&Rs and bylaws, and consult a legal professional if necessary. For more information about COA/HOA foreclosures in Washington DC, visit Nolo's website.
As a homeowner in a community governed by an HOA or COA, it's essential to stay informed about your rights and responsibilities. By understanding the potential consequences of failing to pay your monthly dues and being proactive in addressing any financial challenges, you can avoid the risk of foreclosure and maintain a healthy relationship with your association.
At Gordon James Realty, our team of experts is well-versed in community association management, and we're here to help you navigate the complexities of HOA and COA regulations. Our comprehensive community management services provide everything you need to keep your association running smoothly while ensuring that you remain informed and in control.
If you're seeking professional assistance with community association management in the Washington DC area, look no further than Gordon James Realty. Our industry-leading approach enables transparent and proactive communication, reducing your risk and safeguarding your investment. To learn more about our services and how we can help you, visit our Community Association Management page or contact our team today.
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