If you fail to pay your HOA or COA assessments in Alabama, the association may get a lien on your property and foreclose on it.

When you purchase a single-family home, townhouse, or condominium in a covenanted neighborhood, you will almost certainly be required to pay fees and assessments to a homeowners’ association (HOA) or condominium owners’ organization (COA). If you fall behind on your assessments, the association will most likely attempt to recover the debt by regular means first. For example, the association will most likely contact you and send you letters. If such efforts don’t work, the association will most likely attempt another method of collecting from you. The association may revoke your usage of the common facilities or initiate a lawsuit to obtain a monetary judgment against you. Most HOAs and COAs have the authority to place a lien on your property if you fall behind on your assessments. Not only would an assessment lien obscure the title to the property, making it difficult to sell or refinance, but the property may also be repossessed to compel a transfer to a new owner—even if the property has a mortgage.

If your house is part of a HOA or COA in Alabama and you fall behind on assessments:

The HOA or COA may generally get a lien on your property.
Overdue assessments, late charges, penalties, additional charges, interest, and reasonable lawyers’ fees and expenses are often charged by the organization.
The association may decide to foreclose on its lien.
When a HOA or COA debt is foreclosed, what happens to other liens, such as a mortgage?

If the HOA or COA launches a foreclosure action, you may have a defense or be able to negotiate a means to catch up on the late sums and keep your house.

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Alabama HOA and COA Laws

Different sets of state regulations often regulate HOAs in subdivision communities and COAs. The Alabama Homeowners’ Association Act (Ala. Code 35-20-1 through 14) governs HOAs established on or after January 1, 2016. HOAs that existed prior to this date may choose to be regulated by the Act. Rules governing the operation of the HOA, particularly those governing assessments and liens, are often included in the association’s Declaration of Covenants, Conditions, and Restrictions (CC&Rs). HOAs created prior to the implementation of the Alabama Homeowners’ Association Act are normally controlled by their CC&Rs.

The Alabama Uniform Condominium Act and the Condominium Ownership Act (Chapters 8 and 8A of Title 35 of the Code of Alabama) regulate COA operations in the state.

In General, How Do HOA and COA Liens Work?

Most HOAs and COAs have the authority to lay a lien on your house if you fall behind on your assessments, based on the Declaration of CC&Rs or Declaration of Condominium and state law. If you go behind on your payments, a lien will normally be placed on your property. In certain circumstances, regardless of whether state law mandates registration, the organization will register its lien with the county registrar to give public notice that the lien exists.

Alabama HOA Liens

According to the Alabama Homeowners’ Association Act, a HOA receives a lien for unpaid assessments on and from the due date. (Alabama Code 35-20-12)

Lien notification The HOA must provide written notification of the assessment and lien to the property owner by personal delivery or first-class mail. (Alabama Code 35-20-12)

Before the HOA registers the lien, provide notice. The HOA must register a statement of lien in the office of the judge of probate within 12 months of the assessment becoming due. The HOA must provide the owner written notice by certified mail at least 30 days before registering the statement of lien. (Alabama Code 35-20-12)

Alabama COA Liens

In Alabama, a COA obtains a lien on a unit for any assessments or penalties levied on the owner beginning with the day the assessment or fine becomes due. 35-8A-316(a) (Ala. Code).

The COA may include charges in the lien. The sorts of charges that may be included in the assessments lien are specified by Alabama law. 35-8A-316(a) (Ala. Code). Unless otherwise specified in the condominium declaration, the association may include:

Assessments. The COA may include outstanding assessment amounts in the lien.
Charges for late payments. The COA may also charge unit owners for late payment of assessments.
Fines. For breaches of the declaration, bylaws, and rules and regulations of the association, the association may impose fair penalties.
Additional charges In addition, the COA may levy reasonable fees for the drafting and recording of revisions to the declaration or statements of outstanding assessments.
Interest. The COA may levy interest on delinquent assessments at the association’s specified rate, but no more than 18% per year. 35-8A-315(b) of the Alabama Code
Reasonable legal expenses and charges. To enforce the lien, reasonable lawyers’ fees and expenses may be included in a judgment or decree.

Obtaining an assessment statement from a COA. If you submit a written request, the COA must give you with a list of all outstanding assessments. The lien is discharged if the association does not mail or otherwise present you with the statement within ten business days of receiving your request. You are still accountable for the loan, but the lien has been discharged. The COA may charge a fee of up to $25 to issue the statement. 35-8A-316(h) (Ala. Code).

Foreclosures on HOA and COA Liens in Alabama

An HOA or COA may foreclose if it has a debt.

HOA foreclosures in Alabama

An HOA lien may be foreclosed as specified in the declaration (or other governing papers) or judicially under the Alabama Homeowners’ Association Act. Notice of the sale must be published once a week for three weeks in the counties where the property is situated. (Alabama Code 35-20-12)
COA foreclosures in Alabama

A COA may foreclose on its lien in Alabama in the same way that a mortgage on real estate may. However, the association must provide fair early notice to the unit owner and any lienholders on the unit’s record. 35-8A-316(a) (Ala. Code).

To keep the lien legitimate, the COA must file an action to enforce it within three years of the entire amount of the assessments being due. 35-8A-316(e) (Ala. Code).

HOA and COA Liens, as well as Your Mortgage

A widespread misperception is that the association cannot foreclosure if your mortgage payments are current. However, whether or not you are current on your mortgage does not affect an association’s power to foreclose. Instead, what occurs in a foreclosure is determined by lien priority.

What Exactly Is Lien Priority?

The priority of liens affects who gets paid first after a foreclosure auction and, in many cases, whether a lienholder gets paid at all. Liens normally follow the “first in time, first in right” rule, which states that the lien that is registered first in the land records takes precedence over subsequent recorded liens. A first-lien has a higher priority than other liens and receives first dibs on the earnings of the foreclosure auction. If any funds remain after paying off the first lien, they are distributed to the second lienholder until that lien is paid off, and so on. A low-priority lien may get nothing from a foreclosure auction.

However, state law or the governing papers of an organization might change lien priority.

In Alabama, HOA Lien Priority

Under Alabama law, a HOA assessments lien takes precedence over subsequent liens, with the exception of:

Ad valorem taxes levied by the state and county, municipal improvement assessments, UCC fixture filings, and mortgages and deeds of trust used to secure debt. (Alabama Code 35-20-12)

Priority for COA Liens in Alabama

A COA lien has precedence over all other liens, with the exception of:

Liens and encumbrances recorded prior to the declaration of condominium liens for real estate taxes (and other government charges), as well as a first mortgage or deed of trust recorded prior to the date the assessment sought to be enforced became late. 35-8A-316(b) of the Alabama Code

In Alabama, however, six months’ worth of outstanding common cost assessments take precedence over a first mortgage or deed of trust. The six-month priority lien does not include the association’s expenses or lawyers’ fees incurred in executing its lien. 35-8A-316(b) of the Alabama Code

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