HOA lien
An HOA lien secures unpaid assessments owed by a unit owner to a common interest community association — a condominium, a townhouse association, a planned community.
In Minnesota it runs under the Common Interest Ownership Act, Minn. Stat. ch. 515B.
The limited priority#
The feature that makes these liens matter more than their size suggests.
MCIOA gives the association's lien a limited priority ahead of a first mortgage — for assessments falling due within a defined period immediately preceding enforcement.
Beyond that limited amount, the association's claim is junior and behaves like any other junior lien.
That structure is deliberate. It gives associations enough leverage to collect without letting an accumulated balance leapfrog a lender entirely, and it is why mortgage servicers monitor association arrears on units they lend against — an association's limited priority sits ahead of their security.
Associations do foreclose#
Not a theoretical remedy.
Where assessments go unpaid, an association can enforce its lien, and units are sold on that basis. For an owner already struggling with a mortgage, association arrears are a second and independent route to losing the unit.
Assessment obligations also continue while the unit is owned, regardless of whether the owner is living there or has stopped using the amenities the assessments fund.
Special assessments by the association#
Distinct from municipal special assessments and equally consequential.
An association facing a major capital cost — a roof, siding, a structural repair — can levy a special assessment on every unit, frequently running to thousands of dollars.
That obligation attaches to the unit and, unpaid, becomes part of the lien.
For a buyer, an association with deferred maintenance and an underfunded reserve is carrying a special assessment that has not happened yet. The reserve study and the association's financials tell you more about the cost of ownership than the current monthly figure does.
Before buying a unit#
Obtain a statement of the account from the association, showing what the current owner owes.
Read the financials and the reserve study. Underfunded reserves are a forecast of special assessments.
Ask about pending litigation and any planned capital work.
Unpaid assessments can follow the unit depending on the circumstances, and a buyer who did not ask has taken on an obligation nobody disclosed — because in a distressed or foreclosure sale, frequently nobody knew.
Why lenders care so much#
An association's limited priority sits ahead of a first mortgage, which makes it one of the few claims that can erode a lender's security without the lender having agreed to anything.
Servicers therefore monitor association arrears on units they lend against, and they will frequently advance unpaid assessments and add the cost to the loan — exactly as they advance delinquent property taxes.
For a borrower that means an unpaid association bill can appear on the mortgage statement as an escrow item they did not expect, and it means the servicer knows about the arrears before the borrower assumes anyone does.