A homeowners association (“HOA”) or condo board in Washington, D.C., Maryland or Virginia has super-priority status over even first mortgage holders. Homeowners association foreclosure in the DMV is subsequently quite common. If you are unable to pay your condo or coop fees, your HOA can and will foreclose against your home.
Homeowners association foreclosure procedures
Your HOA will file its super-lien, then proceed to foreclose against you using the same procedures as a mortgage lender. Because your HOA must follow the same foreclosure procedures as mortgage lenders, you have the same right to cure and defenses.
You may seek to negotiate with your HOA and offer a repayment plan or reinstatement. These agreements are often directly negotiated with the HOA board. Or you could force the HOA to accept a repayment plan using Chapter 13 bankruptcy.
Foreclosure by HOA can lead to big debt
In certain cases, the HOA can take the property free and clear of junior liens, and that includes any mortgages. The foreclosure may eliminate the liens against the property, but your liability on the mortgage will remain. As a result, lenders can sue you for a deficiency judgment on any unpaid mortgage balances unsatisfied by the foreclosure sale.
If you are in deep debt on your condo fees and your homeowners association is threatening foreclosure, you should strongly consider talking to debt restructuring attorney to discuss your possible options.