Defenses to an Assessment Lien

A Homeowners’ Association (HOA) has the right to a property lien on your unit if you fail to pay any assessments or dues. This lien attaches automatically, without the need for recording at the county recorder’s office. If the lien amount is large enough or has lasted for more than one year, the HOA has the right to initiate foreclosure proceedings to enforce the lien.

Homeowners may have a number of defenses to an assessment lien. Any of these defenses could prevent a foreclosure or result in the removal of the lien.

Fees Are Not Reasonable

A.R.S. §§ 33-1256 and 33-1807 allow HOA assessment liens to include reasonable attorney fees and reasonable collection costs associated with the delinquent payments. However, if these amounts are not reasonable, they are invalid. If the delinquent assessment was for $50, but the associated costs and fees total thousands of dollars, these costs may be considered unreasonable.

Lien is For Fines Unrelated to Assessments

The automatic lien applies to assessments, dues, and fines relating to the late payment of those assessments. However, any other fines are not part of the automatic HOA lien.

For example, a fine imposed for violating the architectural guidelines cannot be included in the assessment. To enforce this fine, the HOA must give the homeowner a proper hearing, then take the case to court a get a judgment. The judgment can then be recorded and will become a lien against the property.

The HOA cannot proceed to foreclose your unit if the only lien it has is from fines and penalties. They must have an assessment lien to foreclose.

Statute of Limitations

A lien for an unpaid assessment is extinguished unless proceedings to enforce the lien are initiated within three years from the date the assessment was due. If the HOA does not begin foreclosure proceedings in time, then the lien on your unit is no longer valid.

Negotiate With the HOA

If you actually did fail to pay your assessments and the HOA followed the appropriate procedures under Arizona law, see if you can work out an arrangement to pay off the assessments. The HOA may be willing to avoid the costly judicial foreclosure process if you make a genuine effort to pay off your assessments.

Redemption Period 

If the HOA actually sells your property through an order of foreclosure, you still have a statutory redemption period (generally six (6) months unless the property is abandoned, then thirty (30) days) in which you can redeem the property and regain full title to the property.  To do this, you must pay the total amount of the sale price, plus interest and an 8% penalty.

Chernoff Law handles business and real estate litigation matters throughout Arizona. Contact us to discuss your case with an experienced real estate attorney.