HOA dues, late fees, and liens: what happens if you fall behind

HOA dues (regular assessments) pay for everything the association does, so associations have strong tools to collect them. Knowing how collection works, and where the law sets limits, helps you avoid a small problem becoming a big one.

How assessments work

The declaration gives the association the power to levy assessments and usually makes each owner personally responsible for them. The board sets the budget and the dues. Most declarations also make unpaid assessments a lien on the property, a legal claim that has to be paid off before the home can be sold or refinanced.

Late fees and interest

Declarations and state laws commonly allow late charges, interest, and collection costs, sometimes including attorney's fees. These can quickly exceed the original amount owed. Check the assessment and collection sections of your declaration, and your state's statute, for limits.

Fines vs. assessments

Many states treat fines differently from assessments for collection. Florida's § 720.305(2), for example, says a fine of less than $1,000 may not become a lien against a parcel. That doesn't make fines optional, but it limits how they can be enforced.

Foreclosure

In many states, an association can foreclose its lien for unpaid assessments. That's why falling far behind is serious. Some states set limits. In California, Civil Code § 5720 says an association may not use judicial or nonjudicial foreclosure to collect delinquent assessments of less than $1,800 (not counting accelerated assessments, late charges, collection costs, attorney's fees, or interest). It must use other methods, such as small claims court, instead. Rules differ widely elsewhere, so check your state's law.

If you can't pay

• Contact the association early, before the account goes to a collection attorney. Ask for a payment plan in writing.
• Pay the assessment portion first if you can, and ask how payments are applied.
• Dispute errors in writing. Ask for your account ledger with a records request, and compare it with your records.
• Keep paying while you dispute other issues. Withholding dues over a disagreement usually backfires.
• Get legal help if you receive a notice of lien, a demand from a collection attorney, or any mention of foreclosure. Legal aid organizations and housing counselors may be able to help.

Special assessments

Special assessments are collected the same way as regular dues. If a large one is approved, ask about payment plans right away. See special assessments explained and use the calculator to plan.

Selling with a balance

Unpaid assessments, fines, and fees will surface when you sell, usually on the association's resale or estoppel statement, and must be resolved at closing. Clearing them early avoids delays.