What Happens When an HOA Forecloses on a Property in Maryland?

What Happens When an HOA Forecloses on a Property in Maryland?

Unexpected Benefits of Filing for Bankruptcy in Maryland

What Happens When an HOA Forecloses on a Property in Maryland?

Understanding HOA Liens

Definition and Basis for Liens

An HOA lien is a legal claim against your property when you fail to pay the required assessments, fines, interest, or collection costs to your Homeowners Association (HOA). These charges can accumulate quickly, leading to significant financial burdens. If left unpaid, your HOA may place a lien on your property. In Maryland, the Homeowners Association Act grants HOAs the authority to impose liens on properties within their jurisdiction for these types of debts.

Process of Placing a Lien

If you fall behind on your HOA dues and fees, the association will typically send you a notice outlining the amount owed. If you don’t pay within the specified time, the HOA can move forward with placing a lien on your property. This process involves filing a legal document with the county land records office, officially recording the lien against your property. The lien is given a book and page number. You’ll receive notifications throughout this process, and you have the right to contest the charges if you believe they are incorrect or unfair.

Implications of an HOA Lien

HOA liens may have severe consequences for property ownership. The lien attaches to your property title, making it difficult or impossible to sell or refinance your home until the debt is paid off. For Maryland HOAs, the lien accrues interest at a staggering 18%. Additionally, the presence of an HOA lien on your credit report can significantly damage your credit score, affecting your ability to secure loans or purchase other properties in the future.

What Happens When an HOA Forecloses on a Property in Maryland?

HOA Foreclosure Process

If your HOA executes on the lien, they can foreclose on your home. But what happens when an HOA forecloses on a property in Maryland, and how does the process work?

Legal Preconditions for Foreclosure

Before an HOA can start the foreclosure process in Maryland, the HOA has to comply with the terms of its bylaws and other governing documents. The debt must also be past due for a certain period, as outlined in the HOA’s governing documents. Maryland law also dictates the foreclosure process for HOAs, ensuring that homeowners associations follow proper procedures and give homeowners adequate notice and opportunity to resolve any debt.

Steps in the HOA Foreclosure Process

  1. Placing a Lien: Your HOA places a lien or several liens on your home.
  2. Demands for Payment: The HOA will likely send several demands for payment, outlining outstanding dues and fees, including late fees, attorney’s fees, and collection fees.
  3. Notice of Default: If you fail to pay in full or arrange a payment plan that the HOA agrees to, the HOA will send a notice of default, required by Maryland law to foreclose on your home.
  4. Filing a Complaint: The HOA files a complaint with the Circuit Court in the county where your property is located.
  5. Notice of Foreclosure Sale: The HOA will eventually send you a notice of the impending foreclosure sale and set the house for auction.
  6. Auction: After the necessary notice period, the HOA can auction off your home at the courthouse steps or even online.

What is a Sheriff’s Sale?

A sheriff’s sale is a public auction conducted by the county sheriff’s office to sell properties that have been levied upon. In Maryland, sheriff’s sales are usually held at the county courthouse. The sheriff’s role is to oversee the auction process and ensure the sale is conducted fairly and in accordance with Maryland law. The outcome of the sale can vary; a third party may purchase your property, or if no one buys it, the HOA may take ownership. The sheriff’s sale process is often a quicker, cheaper, and easier way for the HOA to sell your house.

Homeowner’s Rights and Remedies

Right to Pay Off the Lien

You have the right to redeem the property by paying off the full amount of the lien, along with any additional costs the HOA has incurred during the foreclosure process. This “right of redemption” is available up until the court ratifies the foreclosure sale. After the sale, you may still have a brief window to redeem the property, but the timeline may vary depending on your case’s circumstances.

Legal Defenses Against Foreclosure

In some cases, homeowners may have legal grounds to challenge the HOA foreclosure. For example, if the HOA fails to provide proper notice through the various stages of the foreclosure process or if you dispute the validity of the debt itself, you can challenge the foreclosure in court. Challenging the foreclosure involves filing a response to the HOA’s complaint and presenting your case before a judge. If your defense is valid, the court may dismiss the foreclosure action or require the HOA to start the process over.

Bankruptcy Can Stop Foreclosure Immediately

If you file for bankruptcy even one minute before your house is set to be auctioned, the foreclosure cannot move forward and is rendered null and void. The moment you file, an automatic stay goes into effect, immediately halting all collection actions against you, including foreclosure proceedings. The type of bankruptcy you choose can impact how the HOA lien is treated.

Chapter 7

In a Chapter 7 bankruptcy, you can discharge your personal liability if the HOA has placed a lien. However, it will not eliminate a lien—meaning once the Chapter 7 is over, the HOA can continue with the foreclosure process.

Chapter 13

Chapter 13 bankruptcy allows you to restructure your debts—including HOA penalties, fines, and liens—and pay them off over 3-5 years. You can also choose to sell your home yourself in a Chapter 13.

Chapter 11

Similar to Chapter 13, Chapter 11 lets you propose a repayment plan. However, Chapter 11 does not have the strict debt limits and timeline as Chapter 13, which often means that Chapter 11 can be a more flexible option.


Facing foreclosure from an HOA in Maryland can be a daunting and complex process. It's essential to understand your rights and the steps involved to protect your property. If you are struggling with HOA dues or facing foreclosure, consider seeking advice from a bankruptcy attorney or legal professional. They can help you explore your options, provide guidance, and potentially prevent the loss of your home.

Key Takeaways

  • Unpaid HOA liens can lead to foreclosure.
  • Maryland law grants HOAs the power to place liens and foreclose on properties.
  • The foreclosure process involves legal filings, court proceedings, and a public auction.
  • Homeowners have the right to redeem the property by paying off the lien.
  • Legal defenses may be available to contest the foreclosure.
  • Filing for bankruptcy can halt foreclosure proceedings and provide options for repayment.

Need Help? Contact The Law Offices of Nicholas J Del Pizzo

If you’re facing HOA foreclosure in Maryland, don’t hesitate to reach out to The Law Offices of Nicholas J Del Pizzo. Our experienced attorneys can help you explore your options, provide guidance, and potentially prevent the loss of your home. Contact us today to discuss your situation and find the best solution to protect your property and financial future.

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