With the growth of organized housing communities, particularly condominiums, we have also seen an increase in the number of Homeowner Associations – or HOAs as they are widely referred. HOAs generally own or control the common areas of a housing community and are charged with specific obligations under the HOA’s by-laws; such as, mowing the lawns, removing snow and ice, maintaining a club house or pool (if one exists) and enforcing the rules of the community. To carry out its obligations, the HOA is also usually permitted to charge an assessment to the homeowners in the community. The assessment becomes a personal obligation of the homeowner – once that can be enforced through legal measures if not paid.
What many homeowners do not realize is that Pennsylvania law also provides the HOA a statutory lien on the real property located within the housing community. Known as a “super” lien with “super” priority, the HOA lien is protected in part from non-payment, bankruptcy, and foreclosure.
Here are some examples – if you are a homeowner subject to a HOA and you do to pay your assessments, the HOA can obtain a judgment against you in the amount of the unpaid assessment(s), plus interest and (so long as allowed under the by-laws) attorneys’ fees. However, even if the HOA does not file a lawsuit, Pennsylvania law gives the HOA a lien on your property equal to whatever amount is owed. If you decide to sell your home, the HOA lien must be paid in order to pass clear title. If you decide to file for bankruptcy, the HOA can be treated as a secured creditor based upon that lien. If your bank decides to foreclose, a portion of the HOA’s lien (6 months preceding the date of the sale, to be exact) will survive the sale. Finally, the law gives your HOA the right to file its own foreclosure action against your property, which could potentially divest your of title to your home (in these situations, the first mortgage holder will often step in to pay the overdue assessments in order to preserve its lien!).
Who knew HOAs held such power? One common justification for such “super” liens is that the maintenance repair and enforcement activities of HOAs preserve the value of the community and super liens help ensure that HOAs receive the funds needed to maintain their community.
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