If you fail to pay your COA or HOA assessments in Louisiana, 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 condominium owners’ association (COA) or homeowners’ association (HA) (HOA). 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 COAs and HOAs 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 you live in a COA or HOA and fall behind on your assessments in Louisiana:
If you become behind on your assessments, the COA or HOA may generally get a lien on your house.
If you get behind on your assessments, the COA or HOA may foreclose.
When a COA or HOA debt is foreclosed, what happens to other liens, such as a mortgage?
If your COA or HOA files a foreclosure case, you may have a defense, such as the association charging you too much, imposing exorbitant fees, or failing to follow state rules. Alternatively, you may be able to work out a plan to catch up on the past-due sums and preserve your property. You may be able to pay off the full delinquent, negotiate a lower payback amount, or engage into a repayment plan, for example.
Table of Contents
Louisiana Condominium and Homeowners Association Laws
COA operations in Louisiana are governed by the Louisiana Condominium Act (La. Rev. Stat. Ann. 9:1121.101 through 9:1124.115), while HOAs are governed by the Louisiana Homeowners Association Act and later statutes governing privileges (see below) (La. Rev. Stat. Ann. 9:1141.1 through 9:1148).
The precise regulations regulating the operation of your individual COA or HOA may be found in the governing papers of the association, such as the Declaration of Covenants, Conditions, and Restrictions (CC&Rs) or Declaration of Condominium and Bylaws.
In General, How COA and HOA Liens Work
Most COAs and HOAs have the authority to lay a lien on your house if you fall behind on your assessments, according to the declaration 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.
Louisiana COA and HOA Liens
If the owner fails to pay the assessments, the COA or HOA has what is known as a “privilege” (an assessments lien) in Louisiana. The COA or HOA must register a “claim of privilege” in the mortgage records of the parish where the property is situated in order for it to be retained. 9:1123.115(A)(2) and 9:1146).
Charges imposed by a COA and HOA may be included in a lien.
In general, a COA or HOA in Louisiana may include the following charges in its lien:
Unpaid assessments, any penalties or late fees in excess of $250 (COAs), reasonable lawyers’ expenses, and interest are all possible. 9:1123.115(A)(1), 9:1145) (La. Rev. Stat. Ann.
Furthermore, if a condo unit owner fails to pay the assessments on time for three months or more during any eight-month period—and the COA sends the owner with the requisite notice—the COA may accelerate one year of condo fees and file a claim for this amount. 9:1123.115(A) (La. Rev. Stat. Ann.).
In Louisiana, a notice of a COA or HOA lien is required.
Before submitting a claim of privilege, a COA must provide the owner seven days’ notice. The notice must be delivered in person or by registered or certified mail, and it must mention the date the assessment became overdue or accelerated. (9:1123.115(A)(3) of the Louisiana Revised Statutes).
At the same time the lien is filed, a HOA must serve the delinquent owner with a sworn full summary of the claim through certified letter, registered mail, or personal delivery. 9:1146) (La. Rev. Stat. Ann.
Foreclosures on COA and HOA Liens in Louisiana
A COA or HOA may foreclose if it has a debt.
Limitation Period for COA and HOA Liens
If a notification of bringing a lawsuit is not recorded within five years after recording the privilege, the privilege is lost. 9:1123.115(B) (La. Rev. Stat. Ann.). An HOA must file a lien enforcement action within five years after registering the privilege. 9:1147) (La. Rev. Stat. Ann.
COA and HOA 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 Is the Definition of 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.
Priority of COA and HOA Liens in Louisiana
Except for: A COA’s assessments lien comes before all other liens and encumbrances.
privileges, mortgages, and encumbrances on the unit recorded prior to the recordation of the assessments lien property taxes, and governmental assessments in which the unit is expressly described (La. Rev. Stat. Ann. 9:1123.115(C)).
In Louisiana, HOA liens are prioritized depending on the date of recordation. (9:1148) (La. Rev. Stat. Ann. As a result, an association lien will almost certainly be junior in priority to a first mortgage.