When unit owners fall behind on assessments, condo associations have several options for pursuing unpaid balances. While demand letters and eviction filings (via forcible entry and detainer actions) are more common, lien foreclosure is another powerful—but often underutilized—tool in an association’s collections toolbox.
What Is Lien Foreclosure?
Lien foreclosure allows a condominium association to foreclose on its recorded lien in the same way a mortgage lender would. This means the association initiates a legal action that can ultimately result in the sale of the unit at a judicial sale, with proceeds going toward unpaid assessments and legal costs.
Why Consider Lien Foreclosure?
According to a recent article from Tressler LLP, lien foreclosure may be preferable to other collection methods in certain situations:
- Owner Abandonment: If a unit is abandoned, it’s unlikely that an eviction action will result in payment. Foreclosure allows the association to gain control of the unit and either rent or sell it to recoup losses.
- Bankruptcy: If a unit owner files for bankruptcy, some collection actions like eviction are stayed or limited. Foreclosure on a lien, however, may still proceed—especially if it only seeks rem relief (i.e., against the property, not the person).
- No Tenant in Possession: Forcible entry actions are designed to remove current occupants. If no one is living in the unit, pursuing possession may not provide the leverage an association needs. Foreclosure allows the association to move toward sale and recovery.
NOTE: Foreclosure is not always the best first step—it can be expensive and time-consuming. But in certain scenarios, it may be the most effective way to protect the financial stability of the association and prevent losses from snowballing. Associations should weigh the costs and benefits carefully and consult with legal and financial experts to determine the best course of action.
Get the Financial Clarity You Need
Before your board takes legal action, it’s important to understand your association’s full financial picture. That’s where Haus Financial Services can help.
From monthly assessment tracking and budget preparation to delinquency monitoring and financial reporting, Haus Financial Services ensures your board has the tools and insight it needs to make informed decisions about collections, reserves, and long-term planning.
Is your association struggling with owner delinquencies or budget shortfalls?
Contact Haus Financial Services today to schedule a consultation and gain peace of mind with expert community financial management.
