Avoid Foreclosure: Can an HOA Take Your House in Maryland?

Can an HOA Take Your House in Maryland

Facing financial hardship is stressful enough without the looming threat of losing your home. But can an HOA take your house in Maryland if you fall behind on dues?

If this question keeps you up at night, you’re in the right place. In this article, we’ll explore the intricacies of HOA law, providing you with the knowledge and tools to navigate this challenging situation.

Understanding HOA Foreclosures: Can an HOA Take Your House in Maryland?

A Homeowners Association (HOA) is a localized organization that manages and maintains a residential community—such as a subdivision or townhouse community. Condominium associations also have similar rights as HOAs. Their primary role is to enforce rules and regulations, collect dues, and oversee the upkeep of common areas to preserve property values.

HOAs have the special legal authority to impose fines and fees on homeowners who fail to pay their dues. When these debts go unpaid, the HOA can place a statutory lien on your property. This lien serves as a legal claim against your home, allowing the HOA to pursue foreclosure if the debt remains outstanding. HOAs can place many liens, and charge high interest on them.

In some cases, an HOA can obtain a writ of execution from the court, directing the local sheriff to seize and sell your property to satisfy the debt. This process, known as a sheriff’s sale or sheriff’s levy, can result in the foreclosure of your home.

It’s important to note that HOAs typically only initiate foreclosure proceedings when homeowners are significantly delinquent on their payments and have exhausted all other attempts to collect the debt.

The Foreclosure Process by Your HOA

When faced with the question, “Can an HOA take your house in Maryland?” it’s important to understand the HOA foreclosure process. If your HOA decides to pursue foreclosure, they must follow a series of legal steps:

  1. First, they’ll typically send a formal notice of delinquency, outlining the outstanding dues and fees.
  2. If you fail to pay or arrange a payment plan, the HOA will likely send a notice of default, giving you a final chance to resolve the debt.
  3. If the default remains unresolved, the HOA can initiate a judicial foreclosure by filing a lawsuit against you in Circuit Court just like a mortgage lender would.
  4. The HOA can also sue you personally, obtain a judgment, and execute upon the judgment using a sheriff’s sale, which is a less expensive and quicker way the HOA can take your home. They can do this by requesting a Writ of Execution from the Court pursuant to Md. R. Civ. P. 3-641 or 2-641, and executing upon this writ by directing the county sheriff to take certain actions, including selling your home.

Homeowner’s Rights and Defenses

As a homeowner, you have rights and defenses throughout the foreclosure process. You can challenge the validity of the debt or argue that the HOA failed to follow proper legal procedures. You may also have the right to request or negotiate a payment plan from your HOA.

If you file for bankruptcy, an ‘automatic stay’ is triggered, which immediately halts the HOA foreclosure process and allows you to create a plan to repay the debts and catch up on payments.

Addressing Common Problems With Your HOA

You Don’t Completely Understand Your HOA

Many homeowners find themselves asking, “What does the HOA do anyway? Why do I have to pay them?”

It’s common to feel frustrated by the financial obligations and restrictions imposed by your HOA. However, understanding your HOA’s role and powers allows you to protect your rights and navigate potential conflicts.

Take the time to thoroughly review your HOA’s governing documents, including:

  • Declaration of Covenants, Conditions, and Restrictions (CC&Rs);
  • Bylaws; and
  • Rules and regulations.

These documents outline your rights and responsibilities as a homeowner, as well as your HOA’s authority and rights. You will probably be surprised by how much power your HOA really has.

You’re Afraid of Losing Your Home

The thought of being forced out of your property in an HOA foreclosure, coupled with the financial and emotional strain that comes with overwhelming debt, is enough to keep anyone up at night.

It’s important to remember that you have rights and options, even when addressing the scary question, “Can an HOA take your house in Maryland?”

While the foreclosure process can be intimidating, knowing your rights and exploring legal alternatives like bankruptcy can provide a sense of empowerment. Foreclosure is often a last resort for HOAs, and your HOA may be willing to work with you to find mutually beneficial solutions.

Don’t let fear paralyze you; take proactive steps to protect your home and financial well-being.

You Need a Quick Solution

If you’re struggling to keep up with HOA payments or facing potential foreclosure, it’s important to act quickly and explore your options. Ignoring the problem will only make matters worse, and you may be too late to save your home.

Consider reaching out to your HOA board to discuss payment plans or alternative arrangements. Be proactive in communicating your situation and demonstrating your willingness to find a resolution.

Consulting with a bankruptcy attorney can also provide invaluable guidance and help you develop a personalized strategy. An attorney can assess your unique circumstances, advise you on your rights, and help you navigate the legal complexities of HOA foreclosures.

The Role of Bankruptcy in HOA Foreclosures

How Bankruptcy Can Halt Foreclosure

If foreclosure is imminent, filing for bankruptcy can provide immediate relief through the automatic stay, which stops all collection actions, including foreclosure proceedings.

The automatic stay gives you breathing room to reassess your financial situation and create a court-approved plan to pay back your arrears.

Types of Bankruptcy and Their Impact on HOA Debts

Understanding how different chapters of bankruptcy can address HOA debt can empower you to make strategic decisions to avoid foreclosure and repay your debts. 

Chapter 7

Chapter 7 bankruptcy can discharge certain unsecured debts, such as credit card balances and medical bills. However, although Chapter 7 will discharge your personal liability if the HOA has placed a lien, Chapter  7 will not eliminate the lien, which means that once your Chapter 7 is over, the HOA can continue with the foreclosure process. While Chapter 7 can provide relief from other debts, it will not directly address the issue of unpaid HOA dues or prevent foreclosure.

Chapter 13

Chapter 13 bankruptcy allows you to restructure your debts—including HOA penalties, fines, and liens—and pay them off over 3-5 years. When you file Chapter 13, you propose a repayment plan that includes your HOA liens, enabling you to fulfill your financial obligations and keep your home.

Chapter 11

Chapter 11 bankruptcy is primarily used by businesses but is also available to individuals with substantial debts. Like Chapter 13, you can reorganize your debts and create a repayment plan. However, Chapter 11 is more complex than Chapter 13 and is generally considered if your debts surpass the Chapter 13 debt limit of $2,750,000.

The choice between Chapter 7, Chapter 13, and Chapter 11 depends on your financial circumstances, the nature of your debts, and your long-term goals. Consult with an experienced bankruptcy attorney to determine the best course of action for your situation.

Preventive Measures and Early Actions

When asking, “Can an HOA take your house in Maryland?” it’s essential to take preventive measures and act early to avoid escalation. If you’re struggling to make HOA payments:

  1. Reach out to your HOA board as soon as possible.
  2. Request a meeting to discuss your situation and explore the possibility of a payment plan or reduced interest rates.
  3. Maintain open communication with your HOA—it can go a long way in finding a mutually beneficial solution.
  4. If you believe that your Homeowners Association (HOA) is not adhering to its legally established guidelines, speak with an attorney immediately.

Key Takeaways

  • HOAs have the legal authority to initiate foreclosure proceedings for unpaid dues and fees.
  • Homeowners have rights and defenses throughout the foreclosure process.
  • Filing for bankruptcy can halt foreclosure actions through the automatic stay.
  • Chapter 11 and Chapter 13 bankruptcy allow you to restructure debts, including HOA arrears.
  • Early communication with your HOA and seeking legal advice can help prevent escalation.
  • Speak to an experienced bankruptcy attorney to explore your options and develop a personalized strategy for protecting your home.

Contact Steiner Law Group to Save Your Home

If you’re facing the threat of HOA foreclosure or struggling with HOA debts, you don’t have to face this challenge alone. At Steiner Law Group, our experienced attorneys understand the complexities of HOA law and bankruptcy proceedings, and we’re here to help you navigate this difficult situation and protect your home.

Contact Steiner Law Group today to save your home from HOA foreclosure or call us at (410) 670-7060.


Frequently Asked Questions (FAQs)

Can an HOA Force You to Sell?

An HOA cannot directly force you to sell your property. However, if you fail to pay your HOA dues or fines, the association can place a lien on your home and initiate a foreclosure-like proceeding called a sheriff’s sale. This process can ultimately lead to the loss of your home if the debt remains unresolved.

What Happens When an HOA Forecloses on a Property?

When an HOA forecloses on a property, the home is typically sold at a public auction to the highest bidder. The proceeds from the sale are used to pay off the outstanding HOA debt in accordance with their super-priority liens, along with any legal fees and costs associated with the foreclosure process. Any remaining funds are then distributed to other lienholders, often with nothing going to the homeowner.

However, filing for bankruptcy even one minute before the public auction occurs may allow you to keep your home via the automatic stay.

What are HOA Super Liens in Maryland?

In Maryland, if a property with a mortgage or deed of trust recorded on or after October 1, 2011, is foreclosed upon, the law favors the HOA or COA by giving them priority for a lien on the property. This lien covers up to four months of unpaid expenses or $1,200, whichever amount is smaller. It’s important to note that this amount doesn’t include any collection costs, interest, attorney’s fees, special assessments, or late fees.

What are COAs?

COAs, or Condominium Owners Associations, are similar to HOAs but specifically govern condominium communities. Like HOAs, COAs have the authority to place liens on properties and initiate foreclosure proceedings for unpaid debts.

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About Eric Steiner, Esquire

Mr. Steiner graduated from the University of Michigan Law School in 2006. Since then, he has focused his practice on bankruptcy, real estate, commercial and consumer collections, including representing the third largest lender in the greater Baltimore area.