Association Assessments

• The Act empowers an HOA to charge assessments to the community's individual homeowners to pay for expenses, including the upkeep of common areas. This includes things such as roads, parking lots, sidewalks, swimming pools and other recreational facilities. Such assessments may be charged only to homeowners who benefit from that expense. The Act calls for these charges to be equally divided among all the owners, but allows the community's declaration to require an alternative method of allocating such charges. The declaration is similar to the bylaws of an organization.
  
  

Assessments as Liens

• The Act permits the assessment charges to become a lien against the owner and his property only by following certain procedures. A lien is a legally recognized debt that attaches to the property in question, similar to a mortgage. After a particular charge is more than 30 days delinquent, the HOA can send the individual owner an official delinquency notice and demand for payment. If the owner does not respond or make payment arrangements within 15 days of this notice, the HOA can then record the debt as a lien against the owner's property. This must be a legal recording with the clerk of the court of the county in which the the property is located.
  
  

Effect of Liens

• A lien created for unpaid and legally valid HOA charges attach to the property superior to any other liens except for prior mortgages and tax liens. If the property is foreclosed on, the HOA lien will be paid from the foreclosure sale proceeds before any junior liens, which would end the lien. If the HOA lien does not get paid from the foreclosure, the Act has provisions regarding this. A foreclosure from a first mortgage will eliminate the HOA lien, whether it is paid or not. For any other act of foreclosure, an unpaid lien can remain against the property for up to three years after the lien was recorded.
  
  

Other Provisions

• The Act allows the HOA to include in their common expenses any lien extinguished after a foreclosure. This means all the community's owners, including the buyer from the foreclosure sale, will pay an individual share of the amount of this unpaid lien. The HOA is permitted to charge up to 18 percent annual interest for delinquent assessment payments, in addition to costs. All these amounts also become part of the lien. The Act applies to planned communities and not to condo or coop developments.