Common Questions: HOA Foreclosures
What are the Limitations on HOA Foreclosures in Georgia?
Under the Georgia Property Owners’ Association Act (GPOAA), associations can only foreclose on assessment liens judicially. That is, an association can ask a court to order a foreclosure but cannot foreclose non-judicially like with a mortgage. O.C.G.A. §44-3-232(c). A judicial foreclosure suit can only be pursued if the delinquent amount is at least $2,000. Id. An association could bring a small-claims action seeking a judgment for a lesser amount but would not be able to foreclose the lien. Importantly, foreclosure suits must be filed within four years of delinquency, as association liens expire after four years. Id.
For Non-GPOAA communities, you may visit the Georgia HOA Laws Guide to find applicable statutes.
Who is Responsible for Paying the Mortgage after a Foreclosure?
The Georgia Property Owners’ Association Act (POAA) permits an association to foreclose on a home with a superior mortgage, but the mortgage survives the foreclosure sale. The prior owner remains personally obligated for the mortgage until it is satisfied and for assessments that come due while he or she owns the property. The purchaser at foreclosure has no individual obligation to pay the old mortgage, but, if it is not paid, the bank will most likely foreclose.
If the foreclosure sale amount is greater than the outstanding mortgage, the sale proceeds will pay off the mortgage company, with any surplus paying off the HOA lien. If there is enough money to pay the mortgage and the HOA lien, the surplus belongs to the prior owner. If the foreclosure does not result in a sale because the combined mortgage and past-due assessments exceed the property value, the association can “purchase” the property for the amount of the assessments – thereby extinguishing the lien – and allow the bank to foreclose and sell the property to a new owner. O.C.G.A. §44-3-232(c). For non-POAA communities, you can visit the Georgia HOA Laws Guide to find applicable statutes.
Can Homeowners Recover their Homes After an HOA Foreclosure?
The Georgia Property Owners’ Association Act (GPOAA) does not have any savings provision allowing owners to reverse a foreclosure after the sale by paying delinquent assessments and court costs. The owner being foreclosed upon can attempt to purchase the property at a foreclosure sale. In most cases, an owner can avoid a foreclosure sale by paying all amounts due, plus court costs, to the association before a sale has occurred.
Do Homeowners Have to Pay Assessments Accruing During Foreclosure?
Assessments are the personal obligation of an owner during the time of his or her ownership of the property. O.C.G.A. §44-3-232. Thus, up until the time that title actually transfers, the owner is legally obligated for all accruing assessments. Depending on the value of the property compared to the total lien amounts, a purchaser might elect to pay off any delinquent assessments to clear the title to the property. And, under the Georgia Property Owners’ Association Act (GPOAA), the purchaser would be liable for any unpaid assessments. Also, if the property sells, the proceeds will be applied toward the assessments (to the extent the sale price is sufficient to pay off any existing mortgage). If assessments are fully paid off from sale proceeds, the former owner will no longer be liable for the assessments because the assessments will have been paid.