Academy/Collections & Delinquencies
Lien priority
Where the association's lien ranks against the mortgage when a delinquent property sells
Lien priority is the order in which claims against a property get paid from a sale. In most states that follow the Uniform Common Interest Ownership Act model, the association's assessment lien outranks even a first mortgage, but only for a limited slice of recent assessments, commonly illustrated as six months' worth, not the full delinquent balance. The actual period, and whether your state uses this model at all, is set by your state's statute.
Why priority matters at all
When a delinquent property sells or gets foreclosed, sale proceeds rarely cover every debt attached to it. Mortgage, tax liens, and the association's lien all compete for the same pot of money, and priority decides who gets paid first, second, and last. A lien with low priority can end up getting nothing if the higher-ranked claims eat the whole sale price.
The lien attaches automatically, but recording protects it
The association does not have to sue or file paperwork for the lien to exist. Under the model statute, it attaches the moment an assessment or fine is due.
"The association has a lien on a unit for any assessment levied against that unit or fines imposed against its unit owner from the time the assessment or fine becomes due."
Source: Uniform Common Interest Ownership Act § 3-116, as enacted at W. Va. Code § 36B-3-116, Uniform Law Commission / West Virginia Legislature
That automatic attachment has a limit, though. If the association never records notice of the lien, a buyer who purchases the unit without knowing about the debt can take the property free of it.
"...shall be discharged as to subsequent purchasers for value without notice unless the association shall cause to be recorded a notice of the lien."
Source: Uniform Common Interest Ownership Act § 3-116, as enacted at W. Va. Code § 36B-3-116, Uniform Law Commission / West Virginia Legislature
Recording is what turns an invisible statutory claim into something a title search will actually catch.
The limited-priority slice that beats the mortgage
Even a properly recorded lien does not jump ahead of a first mortgage for the entire balance owed. States that follow the UCIOA model give it priority only for a capped period of recent assessments. West Virginia's version of the model act sets that period at six months:
"...to the extent of the common expense assessments based on the periodic budget adopted by the association... which would have become due in the absence of acceleration during the six months immediately preceding institution of an action to enforce the lien."
Source: Uniform Common Interest Ownership Act § 3-116, as enacted at W. Va. Code § 36B-3-116, Uniform Law Commission / West Virginia Legislature
Six months is West Virginia's number under this model act. Other states set a different period, use a different mechanism, or don't follow this model at all. Check your state's condominium or HOA act for the actual figure that applies to your association. Whatever the period is, assessments that fell due before it started remain owed, they just rank behind the mortgage instead of ahead of it.
Why lenders build their own cap around this
Fannie Mae's own loan-purchase standards are built around this same limited-priority idea. Fannie Mae has indicated it supports keeping a capped, limited-priority period for common expense assessments rather than an unlimited one, because a bounded period gives lenders a measurable amount of risk to price into a loan. That is a lender standard, not a statute: it tracks the state-law cap, it does not create or override it. A board that cites "Fannie Mae's rule" as if it were the law is pointing at the wrong layer.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
Your association forecloses on a unit with a $22,000 delinquent balance. The first mortgage holder objects, saying the HOA lien cannot come ahead of the mortgage at all. Under the UCIOA model followed in many states, what actually happens?
A board never records a notice of lien against a delinquent unit. The owner then sells to a new buyer who had no notice of the debt. What happens to the association's lien under the UCIOA model?
A board member says, "Fannie Mae's six-month rule is federal law, so every state's lien priority is six months." Is that correct?
Sources
- Uniform Common Interest Ownership Act § 3-116, as enacted at W. Va. Code § 36B-3-116, Uniform Law Commission / West Virginia Legislature
- Selling Guide Announcement SEL-2014-02, "Priority of Common Expense Assessments", Fannie Mae
Collections & Delinquencies
Want to know what happens if a delinquent owner files bankruptcy before you can foreclose on the lien? Read Bankruptcy next.
The length of the limited-priority period, whether your state follows the UCIOA model at all, and the exact steps to record and preserve the lien vary by state and by your governing documents. Check your state's condominium or HOA act for the figures that apply to your association.