When you're a property investor or owner, there are always obligations you need to stick to to avoid penalties.
Nearly 41% of homeowners in Colorado are part of homeowner's associations (HOAs). If you own an HOA property, you know that you're also obligated to pay certain fees alongside your mortgage.
HOA fees cover things like the improvement of your property, rule enforcement, and making sure that it is governed effectively. When you're part of an HOA board, liens are tools that you need to get to know.
These tips will help you know how to handle the HOA lien process.
What Is an HOA Lien?
An HOA lien is a type of property lien that is levied when a homeowner doesn't pay the HOA fees that they owe. It is a form of recourse that the HOA has when a member doesn't honor their obligations.
Like any other property lien, an HOA lien makes it so that the owner can't sell, transfer, refinance, or otherwise make transactions until the lien is cleared. HOAs often use this tactic when other methods of collection haven't worked and they want to recover the money that they are owed.
How Does an HOA Lien Work?
When an owner has delinquent HOA fees, the association has the right to place a lien on the owner's property. This typically happens when an HOA board is well-organized and is able to prove what someone owes down to the dollar amount.
You'll need to do property accounting that can keep track of the delinquent fees that a member owes. There are a variety of different types of charges that a member may have accrued. This includes fees related to late payments, HOA violations, interest payments, and assessment costs.
Typically, there are a variety of ways that these liens can be handled. For one, a member can immediately pay the cost and then have the lien removed. The HOA might also take steps to garnish wages, send amounts to collections, and in severe cases, even foreclose on the property.
When the lien is foreclosed on, you'll need to file court proceedings for further action to be taken. The court decision could help the HOA recover money or come to other conclusions.
How Homeowners Associations Handle the Proceedings
It's important that you work with HOA management services that can help with your lien process. They often have lawyers and accountants on staff that will assist you every step of the way.
These pros will make sure that the process is handled correctly and help your HOA collect payments accordingly.
Empower Your HOA Board
An HOA lien is a powerful tool to deploy when you're trying to enforce your policies. Get the help of pros that can address these and other details. Your HOA will be stronger and increase its revenue as a result.
PMI Vail can assist you when you're in need of a variety of HOA and property management services. For a free consultation, send us a message or call 970-306-7886.