An HOA lien can become much more serious when unpaid assessments remain unresolved. In Oregon and Washington, an association may eventually move from a lien to an HOA foreclosure, but each state has different requirements before a home can be sold.
What is HOA Foreclosure?
HOA foreclosure is the legal process an association can use to enforce a lien for unpaid assessments by forcing the sale of a home or unit. It usually follows continued nonpayment after the association has pursued collection and lien remedies.
When Can an HOA Lien Lead to Foreclosure?
A lien does not automatically mean foreclosure will happen. The association must have legal authority to enforce the HOA lien and must follow the procedures required by state law and its governing documents.
Before moving forward, boards should confirm the delinquent balance and verify that payments were credited correctly. Required notices must also be sent in the proper manner. Once an account is referred to an HOA foreclosure attorney, additional legal costs may increase the amount owed.
HOA Foreclosure Process in Oregon
Oregon law allows planned community associations to place liens for unpaid assessments under ORS 94.709. Condominium associations receive similar lien rights under ORS 100.450.
The Association Records the Claim of Lien
Recording the declaration generally provides notice of and perfects an Oregon assessment lien. Before a foreclosure suit can proceed, however, the association must record a notice of claim of lien in the county deed records. The notice must state the amount due and identify the affected owner and property.
Oregon also limits electronic notice. Email or similar electronic communication cannot be used to give notice of failure to pay an assessment or foreclosure of an association lien.
The HOA Files a Foreclosure Suit
Oregon association lien foreclosures proceed through the court. The statutes require them to conform as nearly as possible to the foreclosure procedure for liens under ORS 87.010. An assessment lien generally remains enforceable for no more than 6 years from the date the assessment becomes due.
If the association prevails, the property can ultimately be sold to satisfy the lien. Oregon law also allows an association to seek a money judgment without giving up its assessment lien. For condominiums, required state reports must be current before the association can maintain a foreclosure action.
HOA Foreclosure Process in Washington
Washington has more detailed preforeclosure requirements. The applicable statute depends partly on when the association was established. Before January 1, 2028, some older communities remained under the Homeowners’ Associations Act or the Washington Condominium Act. Communities created on or after July 1, 2018, generally fall under the Washington Uniform Common Interest Ownership Act, or WUCIOA.
The First Delinquency Notice Goes Out
For HOAs governed by RCW 64.38, a delinquency notice generally must be sent no later than 30 days after an assessment becomes past due. It must include the statutory preforeclosure warning. For the first 15 days after the notice, the association generally cannot take additional collection action, except for limited charges permitted by law. Similar requirements apply to condominiums.
The Account Must Reach the Foreclosure Threshold
Washington doesn’t permit foreclosure over just any delinquent amount. At the time the action begins, the owner must owe at least the greater of three months of assessments or $2,000 in assessments. Fines and collection-related charges do not count toward that threshold.
A second preforeclosure notice is also required. It cannot be mailed earlier than 60 days after the first notice and must be sent after assessments have been past due for at least 90 days. At least 90 days must pass after the minimum foreclosure amount has accrued. The board must then specifically approve foreclosure against that property.
The Case Moves Toward Foreclosure
Under WUCIOA, an association may foreclose judicially. Nonjudicial foreclosure can also be available when the declaration contains the trust provisions and power of sale required by statute. Washington law requires that the collection and foreclosure processes be commercially reasonable.
What Happens to the Mortgage?
An HOA foreclosure doesn’t automatically erase a mortgage. The outcome depends on lien priority.
In Oregon, a recorded first mortgage or deed of trust generally takes priority over the HOA assessment lien. Oregon condominium law has a narrower exception that can allow an association lien to become prior to a lender in specified circumstances after 90 days’ written notice.
Washington is also more complex than simply saying the mortgage always comes first. Condominium law and WUCIOA can give a portion of an association lien limited priority over an earlier mortgage, including, in certain cases, qualifying common expense assessments from a six-month period.
Because senior liens can survive an HOA sale, boards should have counsel review title and lien priority before foreclosure.
How to Stop HOA Foreclosure
The most direct way to stop HOA foreclosure is usually to cure the delinquency before the sale. A homeowner should first request an up-to-date ledger and check whether the association applied payments correctly.
If full payment is not possible, the owner can ask whether the association will accept a payment arrangement. In Washington, statutory preforeclosure notices direct homeowners toward housing counseling and legal assistance. They may also lead to mediation when appropriate.
A homeowner may have grounds to challenge the action if the balance is incorrect or a required notice was skipped. Acting quickly is important because attorney fees and other lawful collection costs may continue to increase the amount needed to resolve the account.
When Should an HOA Foreclosure Attorney Get Involved?
Boards should consult an HOA foreclosure attorney before filing suit. Counsel can confirm whether the lien is enforceable and whether the association has satisfied the applicable notice requirements. An attorney can also review mortgage priority and the board’s authority to proceed.
Homeowners facing foreclosure may also need legal advice quickly, especially when they dispute the debt or believe the statutory process was not followed. Washington’s required preforeclosure warning specifically tells owners to contact a housing counselor or Washington-licensed attorney without delay.
Handling HOA Foreclosure Carefully
HOA foreclosure is a powerful collection remedy that comes after a delinquency has progressed beyond an unpaid assessment and lien. Boards in Oregon and Washington should comply with all applicable requirements and consult qualified counsel before taking any action that could result in the loss of a home.
CWD Group offers HOA management services to community associations in Oregon and Washington. Call us today at 503-488-2008 or contact us online!
Related Articles:
- ARC Request HOA Process And What Boards Should Review First
- How To Keep An HOA Board Transition From Turning Chaotic
- Record Requests For HOA: What Documents Should Be Readily Available?
