In Minnesota, if you have unpaid condominium or townhome association assessments—which are often called “HOAs”—these unpaid amounts operate automatically as a lien on the property under Minnesota Statute § 515B.3-116(a), which is part of the Minnesota Common Interest Ownership Act.
What a condo or townhome association lien typically means for the homeowner is that you cannot get out of paying past due HOA assessments while you own the property. Further, it means that the property can be foreclosed by the Association for unpaid homeowner’s association assessments even if you are current on your mortgages. Due to the financial risk of having unpaid HOAs, the Association’s Board of Directors will often opt to foreclose for lesser amounts and on quicker timelines than a mortgagee would typically foreclose an unpaid mortgage.
For the Association, the protection of an automatic Minnesota statutory lien on the property provides a high level of protection for the Association from accruing large amounts of unpaid HOA assessments for which the other members of the Association may have to make up via a special assessment. Unpaid HOA assessments can be collected upon against a unit owner via a lawsuit against the homeowner and very likely at the expense of the homeowner when the Association’s attorney fees are added to the statutory lien amount. Under the Minnesota Common Interest Ownership statute and likely under the Association’s declaration and bylaws, the automatic lien also includes other amounts and charges associate with collection efforts.
Additional to these legal remedies, many Minnesota homeowner’s declarations and bylaws include the provision that the Association may suspend the rights of any owner or occupant including their guests to use the common element amenities. This means that not only will that homeowner be denied their voting rights, but also that a homeowner’s right to use common amenities such as laundry, parking and other services may be suspended for the non-payment of HOA assessments and other charges due to the Association. Minnesota law does not usually allow for the Association to suspend utility services and physical access to the unit.
The best bet is to stay current on your Association dues and avoid any accrual of assessments, late charges and other fees. Bankruptcy may help you by discharging some amounts due to the Association, but the availability of bankruptcy relief for condo or townhome liens is often dependent on the individual circumstances and whether the owner intends to keep the property.
Located in Edina, Lynn Wartchow represents homeowners in all Chapters of bankruptcy in Minneapolis, St. Paul, Ramsey and Hennepin County, and throughout Minnesota.