What Is an HOA Lien in Morristown, NJ?

What Is an HOA Lien in Morristown, NJ?

Beautiful homes with uniformly painted garage doors and manicured lawns line your New Jersey street, making you proud to call your neighborhood home. The residents' homeowners association (HOA) fees make this possible. What if a homeowner can't pay their HOA dues, though?

Research shows that single-family homes' HOA fees are $250 monthly on average. These fees cover general maintenance and landscaping in your neighborhood's common areas. Your HOA board can place a HOA lien on the property of any homeowner who doesn't make their payments.

How does a HOA lien work in New Jersey? Let's explore this property lien and how it affects those managing an association.

HOA Lien: What Is It?

These liens are claims filed against properties to collect past-due HOA dues. Property owners can't refinance or sell their homes until they've paid their outstanding balances.

HOA boards can file liens against property owners since having several delinquent homeowners in a neighborhood may lower the community's home values. Lenders might not be as willing to refinance properties or offer mortgages in the community.

Filing liens also costs HOAs money. You'll have to spend your funds on potentially expensive legal proceedings.

HOA Foreclosure

Suppose a homeowner never pays their HOA lien. You may foreclose on their property.

This may cause homeowners to lose their homes and ruin their credit scores, so property owners threatened with foreclosure may be motivated to prioritize paying their HOA fees to avoid this. You can remove the liens from their properties once they've paid their fees. Sometimes unexpected monetary struggles make paying late HOA fees impossible for some homeowners, in which case foreclosure is unavoidable.

Avoiding Foreclosed Homes

Minimize your problems with HOA fee delinquencies by adopting a firm and clear policy on HOA fee collections. Avoid making exceptions.

State in your HOA policy your schedule for delinquent HOA payments. This will help homeowners understand the process and motivate them to adhere to the payment plan.

Ensure that every notice sent to a delinquent homeowner is simple. Clear notices will help prevent homeowner misunderstandings.

Don't use the homeowner's name or address if you have to discuss them publicly. Embarrassing the debtor could tarnish your association's image.

Publicizing delinquent homeowners might also lead to legal troubles for your HOA. That's because if the court views your HOA as a debt collector, they might describe you as "blacklisting" homeowners, which is discriminatory. It could lead to expensive fines.

Let's say you publish information about delinquent homeowners, but this information is misleading or inaccurate. The affected homeowners may file defamation claims against your HOA, costing you money and your reputation. Consult an attorney before filing liens against homeowners in your neighborhood to ensure you comply with current foreclosure laws.

How We Can Help Your HOA

A HOA lien is a claim you may file against a property owner whose HOA fees are past due. An unpaid HOA lien may lead to a foreclosure in New Jersey.

PMI Prime Property is your leading provider of HOA management services in the Garden State. We can help you navigate HOA liens, reporting, and accounting. Schedule a consultation today!