Several years ago the Virginia General Assembly gave community associations the power to foreclose on their assessment liens.  This provided an apparent powerful tool in the collection of delinquent assessments.  I emphasize the word apparent.  First of all, and worst of all, association liens are subordinate to first mortgages and real estate taxes.  In this day in time it is most often the owner with virtually no equity in his property that is also delinquent in his assessments.  The first step in deciding on the use of the foreclosure option is to perform a title search to determine what liens are on the property. That might result in a quick decision to cease all action toward foreclosure because the sale will not yield any dollars for the association.  However, if there is substantial equity you should keep pursuing that option if the balance owed by the homeowner is significant enough to make the investment of costs  (attorney’s fees, advertising the sale, etc.) worthwhile. 

You will ask: well, can’t we recover those costs in the foreclosure?  Maybe…..if the foreclosure actually occurs.  The homeowner might approach you to pay it off and want to “make a deal”.   Also, depending on several factors, the sale may not occur because there are no bidders. You may ask: why not have the association bid on it?  You must consider many factors before going down that perilous road.  What shape is the property in? What will you do with it? Can you afford to buy it? Where is the money coming from?  

An alternative course for using the lien foreclosure power is to notify the holders of mortgages on the property of your intent to foreclose. Most of them have the power in their loan documents to pay the lien and add it to the balance of the loan.  A few have elected to do this rather that deal with the lien foreclosure process.  Clearly it is the most efficient use of the lien foreclosure power.  In many cases you will do more for the association by obtaining a judgment against the delinquent owner.  It is more injurious to his credit and a judgment affects all property owned by the debtor not just the home or unit in your association – this increases the chance of being paid at some point which could be sooner rather than later.  Also, by statute, interest is accruing on the judgment even if your association documents do not provide for interest. 

If you have a situation where the delinquency is getting extraordinarily high and you are considering all your options we will be glad to walk you through them and obtain the title information that you need.  As you can see each situation is relatively unique and there are many factors to consider.