When Can an HOA File a Lien in Maryland: What to Know

When Can an HOA File a Lien in Maryland?

HOA liens have severe implications. If left unaddressed, they can lead to the sale of your home. But when can an HOA file a lien in Maryland? Many homeowners are uncertain about the specific conditions under which an HOA can place a lien on their home—leading to confusion and anxiety about homeowners’ rights and obligations.

In this article, we’ll discuss the question, “When can an HOA file a lien in Maryland?” and the lien foreclosure process so you can make informed decisions about the future of your home.

Understanding HOAs and Their Authority

A Homeowners Association is an organization that manages and maintains a residential community. When you purchase a home in an HOA-governed community, you automatically become a member and agree to follow the HOA’s rules and regulations.

One of the HOA’s main responsibilities is to collect homeowner dues to maintain and improve the community. If you fail to pay your dues, the HOA has the power to place a lien on your property.

A lien is a legal claim against your home, which may make it more difficult to sell or refinance a home until the debt is resolved.

How are HOA Liens Different from Other Liens?

Generally, HOA liens are different from other types of liens because they are specific to properties within an HOA community and are triggered by failing to pay HOA dues or assessments. These liens can lead to a faster collection sale compared to traditional residential mortgage foreclosures.

Also, under Maryland law, a portion of an HOA lien can be considered “super-priority” liens, meaning that it can take precedence over other types of liens—even your first mortgage.

So, when can an HOA file a lien in Maryland? An HOA can legally file a lien against your property when you fail to pay your dues, assessments, or fines within a specified timeframe.

Specific conditions for filing a lien depend on your HOA’s governing documents, including the Conditions and Restrictions (CC&Rs) and bylaws. These documents outline homeowners’ obligations and the HOA’s power.

Maryland also has specific laws that outline HOA actions, such as the Maryland Homeowners Association Act and the Maryland Contract Lien Act, which provide a framework for HOAs to enforce rules and collect payments.

Maryland Homeowners Association Act (MHAA)

The MHAA outlines the rights and responsibilities of both the HOAs and homeowners. It includes provisions for:

  • Governance
  • Financial management
  • Dispute resolution
  • Enforcement of rules

Maryland Contract Lien Act (MCLA)

The MCLA sets the context for when and how HOAs can place liens for unpaid dues and assessments. It also states the process for notifying homeowners and provides steps for enforcing or resolving liens.

From Lien to Foreclosure: Understanding the Process

If your HOA places a lien on your property, it’s essential to understand the steps they must follow to proceed with foreclosure. Here’s what you should expect:

1. Demands for Payment

The HOA will probably send you several demands for payment. These notices outline the total amount owed—which can include late fees, attorney’s fees, and collection costs.

2. Notice of Default

If you fail to pay the outstanding balance in full or arrange a payment plan the HOA agrees to, they have the right to send you a notice of default according to Maryland law.

3. Lien Placement

The HOA can place one or more liens on your home due to outstanding dues, assessments, or fines.

4. Foreclosure Complaint

If the default goes unresolved, the HOA has the right to foreclose on the lien. They can file a complaint with the Circuit Court in the county where your property is located, initiating the legal foreclosure process in Maryland.

5. Notice of Foreclosure Sale

Eventually, the HOA will send you a notice of impending foreclosure, which will include the location and date where and when your home will be auctioned off to the highest bidder.

6. Auction

Finally, after providing the required notices, the HOA will auction your home at the courthouse steps or online.

Your Specific Rights as a Homeowner

You have specific rights as a homeowner. You should receive proper notices at each stage, and you may have the opportunity to contest the lien or foreclosure if you believe the HOA has acted inappropriately.

Sheriff’s Sales in Maryland

In some cases, the HOA may schedule a Sheriff’s Sale instead of foreclosure because it’s often quicker and less expensive.

A Sheriff’s Sale is a public auction conducted by your county Sheriff’s Department where your home is sold to the highest bidder to satisfy outstanding liens and debts. The county Sheriff’s Office conducts the sale, usually at the courthouse or online, to ensure a fair process that complies with state law.

The outcome of a Sheriff’s Sale may vary. A third party may purchase your property, or if no one buys it, the HOA may take ownership. For the HOA, a Sheriff’s Sale is often a quicker, cheaper, and easier way to sell your house compared to other foreclosure methods.

How Homeowners Can Address and Resolve HOA Liens

If your HOA has placed a lien on your property, take action quickly to avoid your house being sold. Here are some steps you can take:

Review the Claim

Carefully review the lien and any supporting documentation to make sure the HOA has followed proper procedures and the charges are accurate. If you believe there are errors or discrepancies, gather evidence to support your case.

Negotiate with the HOA

Contact your HOA board or management company to discuss the lien and review potential resolution options. You may be able to negotiate a payment plan or settlement that allows you to catch up on your outstanding dues and fees over time.

Contest the Lien

If you believe the HOA has placed a wrongful lien on your property or is pursuing an improper foreclosure, you may have legal defenses available. These could include:

  • Challenging the validity of the lien based on procedural errors or inaccurate charges
  • Asserting the HOA failed to follow proper notice requirements
  • Arguing the HOA’s actions violate state law or the community’s governing documents

File for Bankruptcy

Filing for bankruptcy will stop all foreclosure actions immediately via the ‘automatic stay. The automatic stay halts all collection activities, giving you the breathing room to propose a debt repayment plan that includes HOA dues and fees in Chapter 13 or Chapter 11 bankruptcy.

However, bankruptcy is a complex process with long-term implications. Consult with an experienced bankruptcy attorney to figure out your best options.

When facing an HOA lien, time is not on your side. Take action immediately to protect your most valuable asset—your home.

Key Takeaways

  • HOAs have the power to place liens on your property for unpaid dues, assessments, and fines
  • In Maryland, HOAs can file a lien when you fail to pay within a specified timeframe
  • HOA liens may lead to foreclosure or a Sheriff’s Sale
  • If you’re facing an HOA lien, review the HOA’s claim, try to negotiate with the HOA, and seek legal advice
  • Chapter 13 and Chapter 11 bankruptcy will halt collection activities and allow you to propose a repayment plan.
  • Consult with a bankruptcy attorney to explore your options and protect your home.

Contact Steiner Law Group to Protect Your Home

If you have more questions about when an HOA can file a lien or how bankruptcy can help, contact Steiner Law Group today to schedule a free consultation. You can also call us at (410) 670-7060.

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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.