HOA and condo association foreclosure in New Jersey

HOA and condo collection rules in New Jersey, step by step

• Which law covers your community

  Check your master deed or declaration

  Condominiums are governed by the Condominium Act, N.J.S.A. 46:8B-1 and following. Other planned real estate developments, such as townhouse and single-family communities with an association, are covered by N.J.S.A. 45:22A-43 and following, which apply no matter when the community was set up, and their lien rules in N.J.S.A. 45:22A-44.1 match the condo rules. Those lien rules do not apply to cooperatives.

  N.J.S.A. 46:8B-21; N.J.S.A. 45:22A-43(a); N.J.S.A. 45:22A-44.1(g)

• Notice, then a recorded claim of lien

  The lien starts on the day it is recorded

  The association's lien arises upon proper notice to you, and it takes effect only when a signed claim of lien is recorded with the county, listing the unit, the owner, the amount and when it was due. It can include only sums already due, and the association cannot record a lien for late fees alone. When you pay in full, you are entitled to a recordable satisfaction of lien.

  N.J.S.A. 46:8B-21(a); N.J.S.A. 45:22A-44.1(a)

• What can be added to the lien

  As charges are imposed

  The lien can include interest, late fees, fines, expenses and reasonable attorney's fees for collecting. A condo association can fine you only if its master deed or bylaws allow it, only after written notice of the reason, and only after telling you of your right to use its dispute resolution procedure. Ask for an itemized ledger that separates assessments from fees and fines.

  N.J.S.A. 46:8B-21(a); N.J.S.A. 46:8B-15(e), (f)

• Limited priority over your mortgage: 6 months

  Lien must be recorded before the mortgage foreclosure is filed or the association is served

  Up to 6 months of customary assessments can come ahead of an earlier mortgage if the lien is recorded before the association is served with, or a lis pendens is filed for, the lender's foreclosure. That priority amount does not include reserves, late charges, interest, penalties or collection costs, and the association must notify your first mortgage holder in writing when it records. The priority renews yearly but otherwise ends after 60 months.

  N.J.S.A. 46:8B-21(b); N.J.S.A. 45:22A-44.1(b)

• Foreclosure by suit in court

  After the lien is recorded

  The association forecloses by filing suit in its own name, in the same manner as a mortgage foreclosure, so you will be served and can answer in court. It can also sue you for a money judgment without giving up the lien. Unless the master deed or bylaws forbid it, the association can bid at the sheriff's sale. The Judiciary's foreclosure mediation program does not cover condo or HOA liens, so ask the association and its lawyer directly about a payment plan.

  N.J.S.A. 46:8B-21(f); N.J.S.A. 45:22A-44.1(f)

• If your lender forecloses instead

  After a mortgage foreclosure sale

  A lender or buyer who gets title through a first mortgage foreclosure is not liable for dues that came due before it took title, except as the priority rules allow. Unpaid amounts that cannot be collected from you can be spread to all owners as common expenses. You can ask the association for a certificate of unpaid assessments, which it must give within 10 days.

  N.J.S.A. 46:8B-21(d), (e); N.J.S.A. 46:8B-22

Common questions in New Jersey