Does an HOA Lien Filed on the Former Owner Survive a Foreclosure in Virginia?

The powers and administration of home owners associations (HOAs) in Virginia are regulated by the commonwealth's Property Owners' Association Act, which is part of the Code (Statutes) of Virginia. The Act permits an HOA to charge and collect assessments from the individual owners and allows the HOA to create a lien against each individual property for those assessments.

Owners Association Liens

A lien is a legal action that is placed against real property to secure payment of a debt. Mortgages are a common type of lien. The Act makes all assessments made by a HOA a lien against the affected individual properties under the HOA's management. However, the Act requires the HOA to perfect the lien in order to attach it to the individual property. This is done by filing a memorandum of lien with the local county clerk's office, which is recorded in the property records of that county. Until the lien is satisfied by payment and such satisfaction is recorded, the lien stays attached to the affected property.

Priority of Liens

Real property often has multiple liens filed against it. The Act specifies that a lien perfected by a HOA is superior to other liens against a particular property, except for tax liens and mortgages that were in place prior to the HOA lien. In the event of a foreclosure sale, the sale proceeds will first go to pay superior liens. If there is not enough money to pay a HOA lien, the lien stays attached to the property, as documented in the property records of the local county.

Foreclosure

Any party that is owed money secured by a lien can foreclose against the affected property in the case of a default. This is also true for an HOA. The Act allows the HOA to foreclose on the lien against a property for non-payment of assessments. The Act requires the HOA to follow all the legal requirements necessary in a foreclosure action. If the HOA sells the property this way, it can use the proceeds to pay the outstanding HOA lien and remove it. If a mortgage lender forecloses on the property, it will pay the HOA lien if there is enough money left after paying off the mortgage balance.

Other Provisions

The Act requires the HOA to legally remove the lien against the affected property if it collects enough money from the proceeds of a foreclosure sale. If the HOA lien is not so satisfied, the Act requires any legal action to be commenced within three years of the time the memorandum of lien was filed. The HOA also has the right to sue the debtor-owner directly to collect unpaid assessments. Collecting the money this way would also require the HOA to then legally remove the lien.

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