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Addressing unpaid fees in foreclosure situations in Connecticut

On Behalf of | Jan 16, 2024 | Real Estate Law

As a condominium’s HOA (Homeowners Association), you may find it complex to deal with unpaid fees when a unit goes into foreclosure. Unit owners have a responsibility to pay their share of common expenses, which are crucial for the maintenance and operation of the condominium community. However, when a unit owner fails to meet these obligations and the unit enters foreclosure, the situation can become complicated.

Fortunately, you can take certain legal actions to recover these funds. Understanding what you can do is crucial for navigating these situations effectively.

Imposing a lien for the unpaid fees

If a unit owner fails to pay their share of the common expenses, these unpaid fees become a lien on the unit. A lien is a legal entitlement that allows you, as the HOA, to recover the outstanding debt. This lien takes precedence over most other claims on the property. For instance, if the unit owner has other debts, like outstanding medical or utility bills, your lien for the unpaid common expenses would typically take priority. 

This means that if the unit is sold, the proceeds would first go toward paying off the lien for the unpaid fees before settling any other debts. However, there are exceptions to this rule, such as tax liens and unpaid mortgages, which would take precedence over the HOA’s lien.  

Enforcing a lien   

When enforcing a lien, if the fees remain unpaid, you can start a lawsuit to foreclose the lien, much like a bank would foreclose a mortgage. If you win the case, the court may require the unit owner to cover your attorney’s fees.  

New owner should not pay the fees  

There is one caveat. When you sell the unit at a foreclosure sale, the new owner is not responsible for the entire unpaid share of common expenses due before their acquisition. If proceeds from the sale do not fully cover these unpaid expenses, they become common expenses. All unit owners, including the new one, share these costs.  

Navigating the complexities of unpaid fees and foreclosures can be challenging. You should consider consulting a legal professional at such times. Doing so can help prepare you to manage these situations effectively.