HOA Foreclosure: What Homeowners Need to Know

Falling behind on HOA dues can feel like a small problem until a lien notice arrives. HOA foreclosure is real in both Nevada and California, and in many cases the association can sell a home without a court case. Both states also require a long series of notices, offers and waiting periods first. This guide explains how the process works in each state, what the association can and cannot foreclose on, and the steps that can stop a sale.

What is HOA foreclosure?

Every owner agrees to pay assessments when buying into the community. When those payments stop, state law gives the association a lien on the home. If the debt is not paid or resolved, the association can enforce that lien by selling the property.
Most associations use nonjudicial foreclosure, which is run by a trustee instead of a court. In California, the association can also foreclose through a court action or sue the owner for the debt (Civil Code §5700). In Nevada, the lien arises when assessments become due, and recording the declaration perfects it (NRS 116.3116).

What debts can lead to HOA foreclosure?

Unpaid regular and special assessments are the main trigger. The lien can also secure late charges, interest and reasonable collection costs allowed by statute. Special assessments are a common cause of sudden delinquency, so see our guide to special assessments.

Fines are treated differently. California bars treating a disciplinary fine as an assessment that becomes a lien enforceable by sale (Civil Code §5725). A charge for repairing common area damage can become such a lien, but only if the governing documents allow it.

Nevada allows a lien for fines, but limits foreclosure on it. The violation must pose an imminent threat to health, safety or welfare, or the penalty must be for failing to follow a schedule required by NRS 116.310305 (NRS 116.31162). Our pillar on CC&R violations covers fines in detail.

What can the HOA add to late assessments?

In California, assessments become delinquent 15 days after they are due. The association may charge a late fee of up to 10 percent or $10, whichever is greater. Interest of up to 12 percent a year can start 30 days after the due date. It may also recover reasonable collection costs and attorney’s fees (Civil Code §5650).

California also controls how your payments are applied. Payments go to assessments first, before late charges, interest, fees or collection costs (Civil Code §5655). That rule keeps fees from quietly growing the assessment balance that counts toward foreclosure.

In Nevada, assessments 60 days or more past due bear interest at a rate tied to the prime rate plus 2 percent (NRS 116.3115). Collection costs must be reasonable and are limited by regulations of the Commission for Common-Interest Communities (NRS 116.310313).

How does the California foreclosure process work?

At least 30 days before recording a lien, the association must send you a notice by certified mail (Civil Code §5660). It must itemize the debt, explain the collection process, and tell you about your right to meet with the board and to request dispute resolution.

You can ask in writing to meet with the board about a payment plan within 15 days of the notice’s postmark. The board must meet with you in executive session within 45 days of the postmark of your request (Civil Code §5665). The association must also offer internal dispute resolution before recording a lien (Civil Code §5670).

Only the board can decide to record a lien, by majority vote at an open meeting (Civil Code §5673). The lien can be enforced 30 days after it is recorded. The decision to foreclose also belongs to the board alone, by majority vote in executive session at least 30 days before any sale (Civil Code §5705).

The biggest protection is the $1,800 rule. The association may not foreclose for delinquent assessments under $1,800, not counting late charges, fees, interest and collection costs, unless they are more than 12 months delinquent (Civil Code §5720). Below that line, it can still record a lien or sue in small claims.

How does the Nevada foreclosure process work?

No earlier than 60 days after an assessment is past due, the association must mail a fee schedule, a repayment plan offer and notice of your right to a hearing. If you do not pay, enter the plan or request a hearing within 30 days, the association may move forward (NRS 116.31162).

The association then mails a notice of delinquent assessment by certified or registered mail. At least 30 days later, it may record a notice of default and election to sell. You then have 90 days to pay before the sale can be scheduled.

The sale is a public auction. Board members, the community manager, the collection agency, attorneys in the case, the person running the sale, and their close relatives may not bid (NRS 116.31164). If a foreclosure mediation under NRS 107.086 is pending on your mortgage, the HOA sale generally cannot go forward.

What is Nevada’s super-priority lien?

Up to nine months of assessments before the notice of default, plus certain maintenance charges and capped collection costs, rank ahead of the first deed of trust (NRS 116.3116). Attorney’s fees are not part of that amount.

In SFR Investments Pool 1, LLC v. U.S. Bank, N.A. (2014) 130 Nev. 742, the Nevada Supreme Court held that a proper foreclosure of the super-priority portion can wipe out the first deed of trust. That is why lenders often pay the super-priority amount before a sale. Our guide to the Nevada HOA foreclosure process explains the rules in detail.

How can you stop HOA foreclosure?

Ask for a payment plan: California requires a board meeting on request, and Nevada requires a repayment plan offer. In California, no extra late fees accrue while you follow the plan (Civil Code §5665).

Use dispute resolution: California requires the association to offer internal dispute resolution before recording a lien, and alternative dispute resolution before foreclosing. Ask for it in writing.

Pay under protest: in California, you can pay a disputed charge under protest and then sue in small claims, if the amount is within small claims limits (Civil Code §5658). Paying also keeps the account from going delinquent.

Check the numbers: request an itemized statement and compare it with your records. In Nevada, the association must provide a statement of unpaid assessments within 10 business days of a written request (NRS 116.3116).

Check the process: missing notices, a missing board vote, or a sale scheduled too soon can delay or void a sale. Bankruptcy can also pause a sale, so speak with a bankruptcy attorney if other debts are involved.

Can you get your home back after a foreclosure sale?

In California, a nonjudicial sale for assessments is subject to a 90-day right of redemption, and the notice of sale must say so (Civil Code §5715). In Nevada, the former owner can redeem within 60 days after the sale by paying the price plus 1 percent per month interest and certain other costs (NRS 116.31166).

These windows are short and the amounts can be large. Get advice as soon as you learn of a sale.

Can you dispute an assessment without risking your home?

Never stop paying assessments to protest a board decision. Withholding payment starts the collection clock, even if you later win the dispute. Pay, document the protest, and use the dispute process instead.

California limits assessment increases without a member vote. A regular assessment may not rise more than 20 percent over the prior year. Special assessments totaling more than 5 percent of budgeted gross expenses in a year also need a member vote (Civil Code §5605). Large repair projects often drive increases, so see our guides to the California HOA reserve study and SB 326 balcony inspection assessments.

When should you call an HOA lawyer?

Most cases are resolved long before a sale, through a payment plan, a corrected balance or a negotiated payoff. The earlier you respond, the more options you have and the lower the fees on your account.

Our HOA foreclosure defense team represents owners in both states. If the dispute is about the assessment itself, see our assessment disputes page.

Frequently asked questions

Conclusion

HOA foreclosure starts with unpaid assessments, not fines, and both states require a long series of notices before a sale. California adds the $1,800 rule and a 90-day redemption period. Nevada adds a repayment plan offer, a 90-day cure period and a lien that can outrank the first mortgage.

Respond to the first notice, keep paying while you dispute, and use every plan and dispute process the law requires. The guides in this series cover each state’s rules in more detail.

Disclaimer: This article provides general information about Nevada and California HOA law and is not legal advice. Reading it does not create an attorney-client relationship. Outcomes depend on the facts and the association’s governing documents.