Listing a Home with Past-Due HOA Fees? Here’s What You Need to Know

Q: I am preparing to list a property. The seller told me they are behind approximately $5,000 in payments on their Owner Association dues. They won’t have the money to pay the past due balance until closing on their property. How should I proceed?

A: A good first step would be to have the seller reach out to the management of the Owner Association to let them know they’ll be listing the property for sale, and reassuring them that the past due payments will be paid in full, from the seller’s proceeds, at closing. Owner Association liens take precedence over most other types of liens on a property, meaning the Owner Association could choose to file a lien against the property (if they haven’t yet) for the past due amount and subsequently foreclose on that lien. They would be first in line to get paid from the proceeds of the foreclosure sale before other lienholders, including mortgage companies. The seller would lose their property and their equity if they couldn’t pay the lien in full before foreclosure. It may also be advisable to mention in your listing that any past due Owner Association dues will be paid by the seller at closing, particularly if the association has already filed a lien against the property. The buyer should object to any past due owner association assessments that appear on the preliminary title report to ensure that the seller will pay them at closing.

All comments and responses from OREF or its staff, managers, and volunteers are non-legal opinions made for general purposes. Each Forms subscriber must rely solely upon their Principal broker or personal legal counsel for specific advice and instruction. You and your client should independently confirm that the Form(s) you use are legally suitable for the purposes intended and that they are current with respect to all laws and regulations.