More than one-quarter of the entire U.S. population resides in a neighborhood with a homeowners association (HOA). Living in an HOA has many benefits, including retaining property values.
HOA communities can accomplish this through community standards and annual HOA dues. Homes that fail to meet these requirements could face an HOA lien.
This article explains the basics of an HOA lien in Winston-Salem. Keep reading to see what this means for your HOA and the options you have for resolving it.
What Is an HOA Lien?
In general, a lien is a legal claim or hold on a piece of property. They are often filed by mortgage lenders or local governments when a homeowner fails to pay their mortgage or taxes.
They also can originate from other entities, such as HOAs. An HOA lien results when a property owner owes money to the HOA and is either unable or unwilling to pay it.
This most often stems from unpaid HOA dues or fines for failing to meet community standards. A lien keeps the owner from selling, refinancing, or transferring the property until the outstanding debt is paid.
When Should an HOA Initiate a Lien?
HOA liens can be a hassle for everyone involved. On the one hand, they may be the only way for an association to retrieve money owed to them. Property owners benefit both personally and financially from annual dues that go toward community upkeep and improvements, and HOAs have a right to expect payment.
On the other hand, filing a lien can lead to costly and lengthy legal battles. Also, too many liens on properties may make lenders leery about approving loans or refinancing homes in your neighborhood.
In general, treat liens as a last resort. Be sure to put everything in writing, but see if homeowners have faced an abrupt or unforeseen financial hardship. You might work out a payment plan, rather than moving forward with a lien or other legal actions.
How Are HOA Liens Resolved?
Most HOA liens are resolved in two different ways. The first is when the homeowner satisfies the outstanding debt or reaches some other agreement with the association.
The second way is through HOA foreclosure. Though rare--only about one-tenth of a percent of all housing units in the United States face foreclosure every year--it is an option if a payment agreement cannot be reached. The HOA can then sell the property to satisfy the outstanding debt.
Note that some states require "judicial foreclosure," meaning the process must go through the court system. North Carolina is not one of these but a "non-judicial state."
That means an HOA or property manager can hold a public foreclosure sale without a court order. This means the process can move much faster than if courts were involved.
Learn More About HOA Liens in Winston-Salem
Now that you understand how an HOA lien in Winston-Salem works, you can determine the next steps to take. An HOA management company can further advise you on the legal and practical strategies for resolving a property lien.
PMI of the Triad is a full-service property management company. We offer resources for homeowners and board members, as well as professional real estate advice. Reach out to us today to learn more about our association management services.
