Liens for past-due assessments are a condominium, or other HOA, association’s most potent tool for getting paid. Just like a mechanics lien, an assessment lien secures the debt owed with property that can be foreclosed upon in the event of non-payment. Also similar to mechanics liens, the particular statutory requirements in order to create and perfect an assessment lien vary from state to state. What is dissimilar, however, is that some states don’t require recordation at all. In fact, the scheme of assessment lien and notice requirements are wildly dissimilar in various states. As as overview, this post will briefly examine the assessment lien system in 4 states: California, Oregon, Washington, and Colorado.
California Assessment Liens
California has strict notice, timing, and filing requirements for an association to claim a valid lien for past due assessments. On one end of the spectrum lies California. California has strict notice, timing, and filing requirements for an association to claim a valid lien for past due assessments. Prior to filing a lien, the association must give the delinquent property owner notice. The notice must contain an itemized statement of the debt owed, and contain certain statutorily-mandated language. Further, the decision to record an assessment lien in California may only be made by the board of the association (may not be delegated) after a majority vote of the board members in an open meeting and recorded in the minutes of that meeting.
There are additional strict requirements that must be met prior to enforcement of a California assessment lien, including: an offer to participate in (and participation in if requested by the owner) dispute resolution pursuant to the association’s “meet and confer” program or other alternative dispute resolution pursuant to California law; the past due assessment amount must be greater than $1800, or more than 1 year delinquent; the decision to enforce must be made by the board of directors of the association in an executive session and recorded in the minutes of the next meeting open to all members; the confidentiality of the owner or owners of the separate interest must be protected by identifying the matter in the minutes by the parcel number of the property, rather than the name of the owner or owner; and any board vote to approve foreclosure of a lien is required to take place at least 30 days prior to any public sale.
Clearly, the requirements in California are strict and unforgiving. As we will see, however, that is not always the case.
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Oregon Assessment Liens
The trek from the most onerous requirements to the least next stops in Oregon. In Oregon, a community association’s lien for past due assessments is not required to be filed in order for the lien to attach or to be perfected. It is required, however, for the lien to be filed in the deed records of the county in which the property is located prior to the initiation of any suit to enforce the lien.
This means that, while an assessment lien in Oregon is technically not required to be filed in order to be perfected, it is without “teeth” until the filing occurs. The end-game scenario of filing a lien is the possibility of foreclosure if the debt isn’t paid – without that possibility the lien may lose some effectiveness. Practically speaking, therefore, Oregon’s requirement that the lien must be recorded prior to initiating enforcement proceedings equates to a general requirement that Oregon assessment liens must be recorded.
Washington Assessment Liens
Washington law specifically provides that an assessment lien may be filed in the property records of the county in which the property is located. Washington continues one step further down this path. While the lien is created and perfected by statute through the recordation of the condominium declaration (note that this does not apply to HOAs other condominium associations) Washington law specifically provides that an assessment lien may be filed in the property records of the county in which the property is located.
This provision accomplishes two things: 1) it may provide the association with some additional leverage; and 2) it puts third-parties on notice that there is a lien encumbering the property.
Colorado Assessment Liens
The final step down this path can be seen in the assessment lien law of Colorado. In Colorado, an association’s lien for past due assessments arises automatically by statute, and there is no specific provision in the law providing for the recordation of the lien. It is worth noting, however, that there is no specific statutory provision forbidding the recordation of an assessment lien, either.
Even in this type of situation, it may be advisable to send some sort of notice to the property owner that the association intends to exercise its lien rights – or even attempt to file the lien in the property records of the county in which the property is located in order to provide notice to third parties, although it is not strictly required.
The legal requirements for assessment liens are varied, and range in complexity. Despite these differences, however, liens for past-due assessments provide a strong incentive to the delinquent property owner to pay the past-due amount, in any state.
