As a real estate professional, I see many properties go into foreclosure unnecessarily. Homeowners Associations, or HOA, have the right to foreclosure in 20 or more states, many of them before the mortgage lienholders.
Hawaii is super lien state. What, might you ask, is a super lien? It’s a lien that is given a higher priority than all other types of liens (pursuant to the law). When it comes to HOA assessment liens, a super lien refers to that portion of a Homeowners Association lien that is given higher priority than even the first-mortgage holder, placing the interest of the HOA in front of the first mortgage.
The Association would always think it has the right to foreclose, because it’s the job of the board of directors to maintain the financial health of the property. A common justification for giving the HOA the right to foreclose is that HOAs help preserve the value of the community. If not, neighborhoods would suffer from deferred maintenance and other problems if their fees remain unpaid.
So, What is the Alternative to Foreclosure?
There are a number of things that a homeowner can do to avoid foreclosure even in drastic economic times. The biggest thing a homeowner can do is communicate with the HOA and Lender. But be sure to learn all you can about steps to avoid foreclosure.