Understanding HOA Liens
When you own a property in a community governed by a homeowners association (HOA), you’re obligated to pay dues. If you fall behind, the HOA can place a lien on your home — and even initiate foreclosure on their own.
This becomes a serious complication if you’re trying to complete a short sale.
A short sale involves selling your home for less than you owe on the mortgage, often to avoid foreclosure. But for it to succeed, all liens must typically be settled or negotiated, because a clear title is needed to close.
Steps to Manage HOA Liens
1. Review Your HOA Account and Get a Payoff
> Request a detailed statement from your HOA showing past-due amounts, fees, and any lien balance.
> Ask for a formal “payoff letter” which outlines what’s needed to release the lien.
2. Talk to Your HOA Early
> Many HOAs are willing to negotiate, especially if foreclosure is also looming over them.
> They may accept a reduced payment to release the lien or allow payment from short sale proceeds.
3. Include HOA Liens in Your Short Sale Package
> Your short sale negotiator or real estate agent should submit the HOA payoff as part of the closing statement to the lender.
> Some lenders will agree to pay a portion (or all) of the HOA dues to clear the way for closing.
4. Know State Laws
> Rules vary by state. In some places, HOAs have strong collection powers, while in others, their lien priority is limited.
(You can check more about your state’s HOA laws on government sites like https://consumerfinance.gov.)
What Happens If You Ignore HOA Liens?
> The HOA could continue collection efforts even after the short sale, especially if they didn’t get paid at closing.
> They might file a personal judgment or garnish wages.
> Worse, an unresolved lien could block the sale entirely, forcing it into foreclosure.
The Bottom Line
Handling HOA liens during a short sale takes extra coordination. With the right approach — contacting your HOA early, involving your short sale expert, and ensuring everything is documented — you can avoid surprises and successfully close.
For more on the basics, see our guides below ...
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