HOA and condo association foreclosure in Vermont

HOA and condo collection rules in Vermont, step by step

• Which Vermont law covers your community

  Before you answer any letter

  The Common Interest Ownership Act covers all residential condos in Vermont after January 1, 1999 and other common interest communities of 12 or more residential units created after that date. Its lien section, 3-116, also applies to communities created before 1999 for events after 1998, except small planned communities of 24 or fewer units with no development rights. Older condos are also governed by the condominium chapter of Title 27, which lets the association foreclose its lien by suit like a mortgage.

  27A V.S.A. §§ 1-201, 1-203, 1-204; 27 V.S.A. § 1323

• The lien is automatic and covers fees and fines too

  From the first installment due

  The association has a statutory lien for assessments and fines, plus reasonable attorney's fees, late charges, interest and other sums due under the declaration, unless the declaration says otherwise. The recorded declaration perfects the lien, so no separate lien filing is required. The lien is not subject to Vermont's homestead exemption chapter.

  27A V.S.A. § 3-116(a), (c), (e)

• Ask for a statement of what you owe

  Answer due within 10 business days

  If you ask in a record (in writing or e-mail), the association must give you a statement of unpaid assessments within 10 business days, and the statement binds the association. Until you agree otherwise, your payments must go first to unpaid assessments, then late charges, then attorney's fees and collection costs, and last to fines, penalties and interest.

  27A V.S.A. § 3-116(i), (n)

• Three months behind, a payment plan offer and a board vote come first

  Before any foreclosure is filed

  The association cannot start a foreclosure unless you owe at least three months of regular budget assessments when it files, you have failed to accept or comply with a payment plan it offered, and the executive board has voted to foreclose against your unit specifically. If the debt includes no unpaid assessment, such as fines only, it must first win a court judgment against you and perfect a judgment lien before it can foreclose.

  27A V.S.A. § 3-116(m), (o)

• Fines need notice and a hearing

  Before a fine is charged

  An association can impose late charges, but it can impose reasonable fines for violating the declaration, bylaws or rules only after notice and a hearing. Ask for the hearing in writing and keep proof.

  27A V.S.A. § 3-102(a)(11)

• Up to 6 months of dues can come ahead of your first mortgage

  If the association forecloses

  A first mortgage recorded before the assessment became delinquent is generally ahead of the association's lien, except for up to six months of regular budget assessments that would have come due before the association filed its action. That is why your lender may pay the association to protect its loan and add the cost to your mortgage. Any sale must be commercially reasonable in every respect.

  27A V.S.A. § 3-116(b), (c), (p)

• Foreclosure under chapter 172, and a 3-year time limit

  Within 3 years after the assessment is fully due

  The association forecloses under the same foreclosure chapter used for mortgages, 12 V.S.A. chapter 172, and must give notice to other lienholders. A lien for unpaid assessments ends unless the association starts proceedings within three years after the full assessment became due. The court can appoint a receiver, and the winner of the case gets costs and reasonable attorney's fees.

  27A V.S.A. § 3-116(f), (h), (j), (l)

Common questions in Vermont