HOA communities are typically considered very desirable places to live, and just over a quarter of US residents currently live in such areas.
A homeowners association can offer various benefits, but residents also need to make sure they follow community policies at all times. This includes paying all HOA dues on time. When members of the community fail to do this, the HOA board members will need to take action, and this could include putting an HOA lien in place.
So what is an HOA lien, and can it affect your rental valuation? Keep reading to find out.
What Is an HOA Lien?
From the moment you move into an HOA community, you'll be a member. That means you start receiving the benefits immediately, but you also need to follow the rules.
HOA dues pay for a lot of what the association does. This includes things like maintaining common areas and organizing vendors.
If any residents aren't paying their dues, this is considered a breach of policy, and the HOA board will need to decide how it should be handled. In some cases, they'll place an HOA lien on the offender's home.
This is a legal claim of ownership that an HOA can keep in place until the dues are settled. If the offender fails to pay back the fees that they owe, the HOA might ultimately foreclose on the property.
Do HOA Liens Affect Credit?
In some cases, having an HOA lien on your property will have an impact on your credit score. Some associations report late or missing payments to the credit reporting bureau, while others don't.
If yours is under the former and your HOA forecloses on your home, it can affect your credit score. The impact can vary depending on what your current credit score is.
Getting Rid of an HOA Lien
HOA liens can attach to properties automatically, or the association may record it with the county recorder's office. Either way, the lien will remain until all owed fees are paid. This includes the missing dues as well as any other fees associated with the lien, such as attorney fees, late fees, or interest.
Once you pay back all of these fees, the association will remove the lien. This typically takes about three weeks or less.
HOA Lien vs. Foreclosure
Your association may foreclose on your property if you fail to pay the fees you owe. This works in a similar way to a standard foreclosure, and it can be more difficult to resolve than a lien, so this is something you want to avoid if possible.
HOA Liens and Rental Valuation
A rental valuation can help someone determine the value of a property, but one with a lien on it will be affected. To avoid this issue, you want to pay your HOA dues on time.
Managing things like this can be challenging for an HOA, so hiring an association manager from a reliable company like PMI Galveston Bay. As a part of one of the largest property management companies in the US, we provide a range of real estate services. Check out our association management page to find out more.
