Assessments, Liens and Fines

The HOA Institute (AZ) 2008

Under today’s laws, associations have an “automatic lien” against every home in the association for unpaid assessments. Assessments are the dues paid on a regular basis for maintenance and upkeep of the association; they are not fines. This means that associations need not record a lien for unpaid assessments to foreclose on one’s home because the law implies one already exists. But, unlike other states where associations may evict homeowners for a few dollars, Arizona associations cannot foreclose until the unpaid assessments have accumulated for more than one year or until the amount owed reaches $1,200, whichever occurs first.

Lawmakers also took great care in distinguishing liens and foreclosure actions for unpaid assessments from liens and foreclosure actions for unpaid fines. Unlike assessment liens, an association cannot record a lien for unpaid fines until it first sues the homeowner in court and wins. This means any “lien” on a homeowner’s property for unpaid fines without proper court authority may be a “false document” in violation of Arizona’s false recording laws. It also means the individual director and/or the association responsible for its recording may be liable for statutory damages of at least $5,000. Importantly, unlike assessment liens, an association cannot evict a homeowner from their home for fine liens. Thus, even if a homeowner is sued for fines and the association wins, the association still cannot foreclose on those fines until the home is sold or the title is transferred.