If you fail to pay your HOA or COA assessments in Georgia, 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.
HOAs in subdivision communities and COAs are sometimes governed by different sets of state regulations. Association liens in Georgia are covered under the Georgia Condominium Act (Ga. Code Ann. 44-3-70 to 44-3-117) and the Georgia Property Owners’ Association Act (Ga. Code Ann. 44-3-220 to 44-3-235). The two sets of legislation are almost identical.
If your house is part of a HOA or COA in Virginia and you fall behind on assessments:
If you become behind on your assessments, the HOA or COA may generally get a lien on your house.
The organization must furnish you with a statement detailing the amount of past-due assessments, plus late fees and interest, if you request it.
After you become behind on your assessments, the HOA or COA may foreclose, but only if the lien is worth at least $2,000.
Before beginning a foreclosure, the association must provide you notice.
If a HOA or COA debt is foreclosed, what happens to other liens, such as a mortgage lien?
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.
Table of Contents
In General, How Do HOA and COA Liens Work?
An HOA or COA may typically get a lien on a piece of real estate if the homeowner is behind in paying the assessments, based on the Declaration of Covenants, Conditions, and Restrictions (CC&Rs) and state law. 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.
Georgia HOA and COA Liens
The recording of the CC&Rs or the Declaration of Condominium in Georgia establishes record notice of the lien’s existence. No additional recording is necessary for any lien claim. 44-3-109(a), 44-3-232(a) of the Georgia Code Ann.
Charges Included in the Lien by the HOA or COA
The sorts of charges that the HOA or COA may include in an assessments lien are specified by Georgia law. 44-3-109(b), 44-3-232(b) of the Georgia Code Ann.
Assessments. Unpaid assessment amounts might be included in the lien by the HOA or COA.
Charges for late payments. The lien may include late fees of up to $10 or 10% of the amount of each assessment or payment due.
Costs of collection. The association may also include court costs, reasonable lawyers’ fees actually expended, selling charges, and other expenditures necessary for the unit’s or lot’s protection and maintenance.
Interest. The HOA or COA may levy interest on outstanding assessments at a rate not to exceed 10% per year from the day the assessment became due.
Fines. Fines from the moment they become payable may be included in the lien.
Rental price. The lien may also include the reasonable rental value of the unit or property from the moment the action is filed until the foreclosure auction or until the judgment is met in another way.
How to Obtain an Assessments Due Statement
The organization must furnish you with a statement detailing the amount of past-due assessments, plus late fees and interest, upon request. You must submit your request in writing and bring it to the association’s registered office. Make sure to notify the organization where you want the statement sent. If the declaration permits it, the group may collect a fee of up to $10 for issuing the statement. 44-3-109(d), 44-3-232(d) (Ga. Code Ann.).
The lien is eliminated if the association does not mail or otherwise provide you with the statement within five business days of receiving your request. 44-3-109(d), 44-3-232(d) (Ga. Code Ann.).
Foreclosures on HOA and COA Liens in Georgia
The HOA or COA must provide notice to the owner at least 30 days before beginning a foreclosure by certified mail or statutory overnight delivery, return receipt requested, at both the address of the unit or lot and any other address or addresses that the unit or lot owner may have designated to the association in writing. 44-3-109(c), 44-3-232(c) (Ga. Code Ann.).
Foreclosure Restrictions
An HOA or COA lien foreclosure is not permissible in Georgia unless the lien amount is at least $2,000. 44-3-109(c), 44-3-232(c) (Ga. Code Ann.).
Limitation of Liability
The HOA or COA must file an action to enforce the lien within four years of the assessment or payment becoming due; otherwise, the lien will expire and become ineffective. 44-3-109(c), 44-3-232(c) (Ga. Code Ann.) .
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 Georgia, HOA and COA Lien Priority
In Georgia, a HOA or COA lien for unpaid assessments takes precedence over other liens on a unit or property, with a few exceptions, such as:
Property taxes, a first mortgage recorded prior to the declaration’s registration, and a subsequent purchase money mortgage, as long as neither the grantee nor any successor grantee on the mortgage is the seller of the land. 44-3-109(a), 44-3-232(a) of the Georgia Code Ann.