Clearing Liens for Unpaid Dues

Started by WinstonH2 • 5 replies • 1635 views

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WinstonH2 (Arizona)
Posts: 14

Posted:

Our small, self-managed, subdivision in Arizona has two houses that have been foreclosed. Both have liens for unpaid HOA dues. One is in process of being sold. Who is responsible for the unpaid HOA dues? Are all or only a portion of the dues collectible?

Thanks!

LarryB13 (Arizona)
Posts: 4,099

Posted:

Winston,

Most homes in Arizona are financed with a deed of trust that allows the lender to foreclose without going to court. The lender's trustee records a notice of sale and the trustee's sale may take place at the property, at the courthouse, or in the trustee's office. This can take place in as little as 90 days.

The lenders' foreclosures wiped out your association's liens. The former owners are still liable for the unpaid assessments up until the date of the trustee's sale. Your association can file civil lawsuits to collect the unpaid assessments if you can locate the former owners.

Suing, however, may cause more trouble that it is worth as you will need to pay filing fees, attorney fees, and private process servers up front. Even if you obtain a judgment, you must still collect on the judgment. Unless you know where to find the former owner and you know that he will pay up, filing lawsuits may be just a waste of time. You just may have to write these amounts off as a loss.

Your association can also turn the debts over to a collection agency, but they may take quite a chunk of the debt for their efforts.

Whoever took title to the homes after the trustee's sale is responsible for paying assessments from that date forward.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Larry is correct in his information. I just wanted to add that in some states there are what are called "Super Liens". I don't know if Arizona has it or not. Alabama is one of those states that does have it. A Super lien puts the HOA on the same footing as a bank. Most of the time banks get paid first and foremost when debts are owed. All other debtors are second in line and get only the leftovers if any. A super lien doesn't make the HOA the second in line but on that same line. Although there usually isn't enough money to resolve both debts even to the bank. It's kind of a wash but in those rare incidences that debts are paid off, it pays off.

Former HOA President

LarryB13 (Arizona)
Posts: 4,099

Posted:

ARS 33-1807(B)(2) puts association liens behind "A recorded first mortgage on the unit, a seller's interest in a first contract for sale . . . or a recorded first deed of trust on the unit."

No Super Lien in Arizona.

WinstonH2 (Arizona)
Posts: 14

Posted:

Thanks so much for the information. I appreciate your quick responses.

MattG2 (Kansas)
Posts: 16

Posted:

Super lien or not, I'd find it hard to believe any secondary lien, be it a HE loan or HOA lien, would supercede the original mortgage lender who has primacy.

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