Although the number of foreclosures initiated by an HOA for lack of payment by the condo owner is small, it can still cause problems for the lender, homeowner, and the HOA, according to MarketWatch.
If a condo owner fails to pay HOA fees for an extended period of time, a super-lien can only be imposed if the condo or HOA covenants declare it. There is also a typical waiting period of between six and months that must pass before the lien can be invoked. When owners are foreclosed on for not paying HOA fees, it causes the lenders to have to pay the fees in order to get repayment of the mortgage. The potential implications to those involved in the foreclosure of a condo causes concern that banks may raise fees in order to cover the increased risk of default.
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