Did you know that unpaid HOA dues can survive a foreclosure?

Commercial Real Estate Agent with Contour Investment Properties

That's right, the foreclosure does not necessarily wipe out a lien for unpaid HOA dues. I didn't know that, and apparently, neither did Bank of America.

Here's the story. I represent a buyer for a house in Melody Ranch, Jackson Hole, WY. The seller is  Bank of America, who acquired the house via foreclosure a few months ago. The previous homeowner quit paying their homeowner's association (HOA) dues months before the foreclosure, and the HOA placed a lien on the property for the unpaid dues. After the lien was filed, the bank foreclosed.

My buyer put the property under contract, and the title company prepared the closing statement. The title commitment showed the HOA lien as an encumbrance, and the closing statement showed that the seller would have to pay the amount of the lien, just under $1000. Bank of America (Seller) protested the charge, saying that their foreclosure should have wiped out the HOA lien, since the Bank of America mortgage was a first lien, and predated the HOA lien. Seemed reasonable to me.

BUT, buried in the Covenants, Conditions, and Restrictions (CCRs) for Melody Ranch was a paragraph that asserts that any lien placed by the HOA will be a superior lien to any mortgage lien placed on the property AFTER THE DATE OF THE CCRs. Who knew you could do that?

So our closing was supposed to be last Friday, and the lawyers have been arguing about this for a week. The attorney for the homeowner's association is very confident the lien must be paid, and has been down this road before, so I believe him.

It makes me wonder how many lenders read the CCRs before they make a loan, and if they would agree to make that loan if they knew their loan would be subordinate to the HOA dues.


Posted by

Tim Bradley
Contour Investment Properties
172 Center Street, Suite 200
PO Box 1152
Jackson, WY 83001
(307) 733-6400

CCIM logoTim Bradley is an owner of Contour Investment Properties, the only brokerage firm in Jackson exclusively focused on commercial and investment property in Jackson Hole and Teton Valley. Tim has earned the MAI designation from the Appraisal Institute as well as the CCIM designation from the CCIM Institute.

Comments (20)

Linda Graves Arnold
Coldwell Banker Gundaker-St. Louis, MO - Chesterfield, MO
St. Louis Real Estate Pro - 314-422-2762 - Referr

Tim, Jim and I just read your post with great interest.  It is certainly an eye opening issue with all of the foreclosures.  I can't imagine any lender EVER looks at C&Rs before loaning to a buyer on a property.  I think secretly, we just cheered the little guy (the HOA) for standing up to BOA.  Honestly, it amazes us that titlework done during the foreclosure process didn't uncover this problem sooner.  We are just surprised we haven't heard of this before with all of the foreclosures.  Something else to watch out for.  Thanks for the post.

Jun 07, 2011 04:34 PM
Kwee Huset
Kwee Huset Realty - Venice, FL
Venice Florida Homes For Sale

Hi Tim, thanks for sharing the information. I will check with the title company in our area about the CCR.

Jun 07, 2011 04:43 PM
Tim Bradley
Contour Investment Properties - Jackson Hole, WY
Commercial Real Estate Expert in Jackson Hole, WY

Hi Jim & Linda, This was an eye-opener for me too. The Melody Ranch CCRs run about 22 pages, and it's dry reading. But sure enough, I found the paragraph, and it's pretty clear language.

Jun 07, 2011 04:43 PM
Paul Lesieur
203kloanmn - North Oaks, MN

Really? We have a HOA where I live and I do know they can collect in court for unpaid dues but a forclosure?

Jun 08, 2011 12:29 AM
Richard Weeks
Dallas, TX
REALTOR®, Broker

Very interesting indead (no pun intended).  I thought at foreclosure all junior liens were wiped out.  Guess you learn something everyday. 

Jun 09, 2011 02:38 AM
Tim Bradley
Contour Investment Properties - Jackson Hole, WY
Commercial Real Estate Expert in Jackson Hole, WY

Richard: Junior liens are wiped out. The clause in the CCRs is a tricky way of making the HOA lien superior by reason of the earlier filing date of the CCRs, nothwithstanding when the actual (later) HOA dues delinquency might occur.

Jun 09, 2011 05:22 AM

Great information,

What was the final outcome, did the clause hold up?

It would be very benificial to have the exact wording of the clause so it could be put in to 

my CCRs.

Thank you



Jun 14, 2011 05:59 AM
Tim Bradley
Contour Investment Properties - Jackson Hole, WY
Commercial Real Estate Expert in Jackson Hole, WY

Mark, the sale did close, and the bank/seller did pay the HOA dues in question. If you'll send me an email address, I can send you the relevant language of the CCRs. It runs a couple of pages.

Jun 14, 2011 06:09 AM
Samson Properties - Bowie, MD
I don't make promises.I deliver results.SOLD HOMES

Tim I didn't know about this as well. I am working on a short sale that is a pain in the you know what. Would've suggested this for a feature if I found this blog two weeks ago. Still going to suggest it. Thanks for sharing. Great post.

Jun 19, 2011 06:19 PM
Lizette Fitzpatrick
Lizette Realty - Richmond KY - Lexington, KY
Lizette Realty, Lexington KY MLS - Kentucky Homes

Very interesting to read this. I'm amazed every day from what I learn here.

Jun 21, 2011 03:46 PM
Richard Housey

I purchased a mortgage foreclosure at an auction in Florida. The title was in the name of the Condo

Association as they had foreclosed it months before and were renting it out. They now want me to pay

past assessments. My feeling is when they took title at the HOA foreclosure they satisfied their own




Jul 04, 2011 06:53 AM
Tim Bradley
Contour Investment Properties - Jackson Hole, WY
Commercial Real Estate Expert in Jackson Hole, WY

Richard, were the past assessments listed as a cloud on your title when you closed? Or were they not recorded? I'm with you, their lien was satisfied when they took title. Can you imagine a foreclosure lender asking the new buyer to pay additional amounts on the old borrower's loan?

Jul 04, 2011 07:34 AM
Tracy McPeek
Cottonwood, CA

I didn't know that either, thanks for sharing the information.

Jul 29, 2011 11:07 AM
Katerina Gasset
The Gasset Group & Get It Done For Me Virtual Services - Provo, UT
Amplify Your Real Estate & Life Dreams!

Tim, thank you for sharing the importance of reading the Covenants, Conditions, and Restrictions (CCRs) of every contract. All the best and keep up the good work!

Apr 09, 2013 01:38 AM
Erika Rogers
Red Rock Real Estate ~ Southern Utah's Largest Independent Brokerage - Saint George, UT
St George Utah Real Estate & Relocation Specialist

Great stuff Tim. It is very important to know the CCRs of every contract to avoid further delays and complications. Thank you featuring this article. All the best!

Apr 10, 2013 07:10 PM
Petra Norris
Lakeland Real Estate Group, Inc. - Lakeland, FL
Realtor, Lakeland FL Homes for Sale

Informative article you have here Tim. Who knew that unpaid HOA dues can survive a foreclosure. Now we know, thanks to you. 

Apr 10, 2013 07:21 PM
Melissa Muse Wiggans
Real Estate Muses - San Antonio, TX
CRS, GRI, ABR - Real Estate Muses

Hi Tim, informative post you have here. Definitely an eye opener. Thank you for sharing.

Apr 10, 2013 07:28 PM
Waynette Hoover Araj
Keller Williams Realty - Asheboro, NC
Connecting your Dreams with the Right Real Estate

Hello Tim, hope everything went well with this sale. I never knew that unpaid HOA dues can survive a foreclosure. I definitely learn new things everyday. Keep them coming!

Apr 10, 2013 07:39 PM
Rosie Crow
Serving Sugar Land, Richmond, Rosenberg, Missouri City - Sugar Land, TX
Exceeding Expectations. Delivering Results

This was definitely an eye opener for me. Title companies and lenders need to pay closer attention to the CCR.

Jul 23, 2013 11:29 AM
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • GRI • HAFA • PSC Calabasas CA

I don't believe that in California any unpaid dues will survive after foreclosure.

At the same time HOA can foreclosure for unpaid dues.

May 26, 2014 07:02 PM