When homeowners fall behind on assessments, an HOA lien can give an association a legal claim against the property. Oregon and Washington both permit association liens in certain circumstances, but their rules for creating and enforcing them differ.
What is an HOA Lien?
Commonly used as an enforcement tool for homeowners associations, a lien is a legal claim that your HOA may use to secure money owed to the association. The lien attaches to the property or lot of the member who owes the HOA. Because of this, if they try to sell or refinance, they may face issues because of the unpaid balance.
Liens don’t give the HOA automatic ownership of the property. However, associations need to consider state laws, which may have different requirements and limitations, including
A lien does not automatically give the HOA ownership of the property. State law may, however, allow an association to enforce the lien through foreclosure if all applicable requirements are met. Boards should distinguish between holding an HOA lien on property and taking the more serious step of foreclosing on it.
Can an HOA Put a Lien on Your House?
The answer to this depends on state laws and, sometimes, your HOA’s governing documents. Here’s what legislation says in Oregon and Washington:
Oregon
Homeowners associations in Oregon are covered by the state’s Planned Community Act. Under ORS 94.709, an HOA may have or use a lien on a lot if an HOA assessment is levied but remains unpaid. Additionally, the lien may be used to cover other fees the association is permitted by law to collect.
HOAs in Oregon don’t need a separate lien notice to establish an assessment lien. Doing so would be redundant with recording the community’s declaration, which already serves that purpose. However, your association will still need to record a notice of claim of lien before it can file a lawsuit to start foreclosure on a property.
Washington
Meanwhile, in Washington, this would depend on which law applies to the HOA community. Associations created before July 1, 2018, still follow Chapter 64.38 RCW until January 1, 2028. Under that legislation, your HOA can pursue a lien for unpaid HOA fees if the governing documents say you can.
Meanwhile, HOAs under the Washington Uniform Common Interest Ownership Act (WUCIOA) must follow different guidelines. The law generally applies to communities created after July 1, 2018, or to older communities that have decided to come under the said law. Under RCW 64.90.485, the HOA is automatically given a statutory lien on a unit if assessments remain unpaid from the time they become due.
HOA Lien Process: What Boards Can Legally Do
The process of applying an HOA lien may vary by state. Here’s what you need to know:
Oregon HOA Lien Process
As previously mentioned, before an HOA in Oregon can file a foreclosure lawsuit, it must first record a notice of claim of lien. This needs to be done in the deed records of the county where the community or property is located.
The notice must state the amount due after accounting for applicable credits and offsets. It also needs to identify the property, its owner, and the community it belongs to. Lastly, it needs to indicate that the balance may continue to increase due to additional assessments or other authorized charges.
State law also allows the HOA board to enforce the lien.
Oregon law allows the board of directors to enforce the lien. Of course, other than a lien and foreclosure proceedings, the HOA is also allowed to pursue a personal money judgment for unpaid
Washington HOA Lien Process
Washington law imposes detailed procedural requirements before a lienholder can foreclose.
HOAs subject to both Chapter 64.38 RCW and WUCIOA must send a delinquency notice to the homeowner if the HOA has lien rights. It must be sent no later than 30 days after the assessment’s due date. Additionally, the legislation outlines delivery requirements and the prescribed notice language.
For 15 days after your HOA sends out a compliant delinquency notice, it’s not allowed to take other collection actions. The law also limits the charges your HOA may add. However, the law also requires a second pre-foreclosure notice after 90 days past the assessment due date, but no sooner than 60 days after the first notice.
Foreclosures shouldn’t be pursued just because there’s an unpaid balance with the HOA. In Washington, a resident must owe assessments equal to at least the greater of three months’ HOA dues or $2,000. Charges don’t count toward this total, and state law also requires that at least 90 days have already passed since the minimum foreclosure amount was accrued.
Additionally, your HOA board needs to approve the said foreclosure on a lot.
HOA Lien Statute of Limitations
A statute of limitations applies to liens in both Oregon and Washington HOAs, but the rules differ.
In Oregon, assessment HOA liens may remain in force for no more than 6 years from the assessment due date. Later unpaid assessments are usually levied when they are due.
Meanwhile, for Washington HOAs governed by the WUCIOA, the lien and the resident’s personal liability are also extinguished within six years of the amount sought becoming due. However, this may be stalled if enforcement or collection proceedings begin within that timeframe.
For older Washington HOAs governed by Chapter 64.38 RCW, the statute does not contain the same express limitations provision. Washington appellate authority has applied a six-year limitations period to written agreements for assessment claims based on governing documents and has treated each annual assessment as a separate claim.
How to Remove an HOA Lien
The easiest way for homeowners to have their HOA lien removed is to resolve their underlying debt. The only other way it can be removed is to establish that the lien is invalid from the outset.
Paying dues can be simple if the amount owed is undisputed. However, if there’s a discrepancy or issue with the balance, a closer review of the ledger may be needed to determine the actual amount owed.
Knowing Boundaries
An HOA lien can be an effective collection tool. However, different states may have different requirements in applying them. As such, your HOA board will need to know what it can and can’t do under the law and your governing documents.
CWD Group offers management services to community associations in Oregon and Washington. Call us today at 503-488-2008 or contact us online to learn more!
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