Homeowners associations (HOAs) are popular in California; with more than 55,000 HOAs in this state. An HOA manages a community of homes and handles much of the maintenance and repairs.
In exchange, you pay a monthly HOA fee, which is on top of your mortgage payment and other household expenses.
Unfortunately, the HOA management company can place an HOA lien on your property if you miss your payments. What does this mean, and what happens if you have an HOA lien on your Santa Clara, CA home?
Continue reading to learn more.
Definition of an HOA Lien
An HOA lien is a legal claim to a property and is like other liens you might experience on your house. A person, business, or entity can place a lien on your property when you owe money relating to it.
For example, a mechanic's lien is a legal claim contractors and repair companies place on homes when the homeowner doesn't pay their bill for the work.
An HOA lien occurs when a homeowner doesn't pay their monthly HOA fees. The management association places the lien on the property to secure the money the homeowner owes.
HOA Lien Process in Santa Clara, CA
The lien process begins when the HOA management company files the necessary documents with the county. Before that, the HOA board must follow HOA lien procedures to ensure the resident meets certain guidelines.
When the resident fails to pay their HOA fees, the HOA company must send them a letter notifying them about their intent to file an HOA lien. After sending it, the HOA company must wait 30 days before filing it.
The letter must also give the resident a deadline for paying it. If they pay it by this date, the HOA company drops the lien. Therefore, if you want to learn how to get rid of an HOA lien, pay the HOA fees balance.
Consequences of an HOA Lien
Having an HOA lien is a nuisance and could lead to serious consequences. First, the lien attaches to your house. Therefore, you must pay it if you sell your home.
Secondly, failure to pay an HOA lien can lead to foreclosure. If you compare an HOA lien vs. foreclosure, you'll discover these are different, but one can lead to the other.
You might also wonder, "Does an HOA lien affect my credit?" The answer is maybe. The lien itself will not affect your credit, but the HOA management firm can report your delinquency to the credit bureaus.
This reporting will affect your credit, while the lien filing doesn't directly affect it.
Resolving an HOA Lien
Having an HOA lien is frustrating and can have serious consequences if you ignore it. Instead of ignoring it, find a way to resolve the issue. The simplest option is to pay the delinquent balance.
You can talk to your HOA company to see if they'll work out a repayment plan you can afford if you can't pay the balance in full.
PMI Southbay is a full-service property management company in Santa Clara, CA. We provide excellent services to property owners and HOA management services for HOA communities.
Reach out today to learn how we can help.
