HOA Super-Liens: When 9 Months of Unpaid Dues Can Foreclose Your First Mortgage

HOA super-priority liens are the foreclosure risk that small landlords who own condos and townhomes mostly miss. In approximately twenty states and the District of Columbia, a community association can foreclose on a property and extinguish the first mortgage for six to nine months of unpaid assessments, often for a dollar amount that is small relative to the value of the property and the size of the loan. The mechanism is rare enough that most owners do not think about it, statutory enough that it survives every challenge the title insurance and mortgage industries have mounted against it, and inexpensive enough to cure once an owner knows it exists.

This brief is the playbook for that exposure. It explains how the super-priority mechanic actually works under state statutes modeled on the Uniform Common Interest Ownership Act, why the dollar threshold that triggers it is lower than most owners realize, what recent appellate decisions have done to the doctrine, and the specific documentation you should pull on every condo and townhome in your portfolio this week.

Section 1: Today's Lens — The Statute Most Owners Sign a Mortgage Beside Without Reading

The mechanics of HOA super-priority liens are specific, statutory, and underdiscussed in the materials most independent investors read before they buy a condo. The first thing to understand is what a super-priority lien is and how it differs from the ordinary HOA assessment lien that sits behind a first mortgage.

An ordinary HOA assessment lien sits behind a first mortgage in priority. If a property owner stops paying HOA dues, the association files a lien, and the lien waits in line behind the first mortgage. When the first mortgage forecloses, the HOA's lien is paid from the foreclosure sale proceeds only after the first mortgage is paid in full. In most cases, nothing is left over for the HOA, and the association's only effective remedy is to sue the prior owner personally for the unpaid assessments.

A super-priority lien is different. In states that have adopted the Uniform Common Interest Ownership Act section 3-116 or modeled their statutes on it, the HOA is granted priority over the first mortgage for a defined number of months of unpaid assessments. The most common period is six months. Nevada is the outlier, with a nine-month super-priority period under Nevada Revised Statutes 116.3116, as documented in the LegalClarity summary of NRS 116.3116. Colorado, Connecticut, Florida, Illinois, Massachusetts, Maryland, New Jersey, New York, Pennsylvania, and Washington are among the approximately twenty states with some form of super-priority statute, per the HOA Docs Direct reference on super-lien states and the Foreclosure Engine primary-source reference on HOA super-priority liens. The District of Columbia has a six-month super-priority rule under its Condominium Act, as confirmed by the DC Court of Appeals in 2024.

The practical consequence of a super-priority lien is that a small dollar amount of unpaid HOA dues, often less than $5,000 to $10,000, gives the association the legal standing to initiate a non-judicial foreclosure on the property. The non-judicial foreclosure sale extinguishes the first mortgage, regardless of how much is owed on that mortgage. The owner who stopped paying HOA dues for nine months in Nevada does not just lose the property to the association. The owner also loses the first mortgage, because the sale wipes the lien priority chain clean.

The November 2024 decision in Wonder Twins Holdings, LLC v. 450101 DC Housing Trust sharpened this exposure for condo owners in the District of Columbia. The DC Court of Appeals reaffirmed its previous holdings that the most recent six months of unpaid condominium assessments constitute a super-priority lien, and held that an association foreclosing on that six-month portion can extinguish any deed of trust on the property, regardless of the asserted terms of the security instrument. The Mondaq analysis of Wonder Twins explains the structure: when the association forecloses on only the super-priority six months, the first deed of trust is wiped. When the association forecloses on more than six months, the first deed of trust survives but the association only has priority for the six-month portion. The structure produces a sharp incentive for associations to foreclose on only the six-month portion, because that is the foreclosure that extinguishes the lender's interest entirely.

The reason most small landlords have not heard of this exposure is that it lives in the gap between three areas of practice that do not routinely overlap. The title insurance industry does not typically issue endorsements covering HOA super-priority liens, per the Jackson & Campbell analysis of title insurance coverage for HOA super-priority liens. The standard ALTA lender's policy excludes losses arising from defects or liens created after the policy date (Exclusion 3(d)), and an HOA super-priority lien that arises from nonpayment of assessments during the policy term is exactly that kind of post-policy defect. The mortgage banking industry recognizes the problem. The Mortgage Bankers Association statement of principles on HOA super-priority liens lists the legal actions MBA member institutions have undertaken to challenge the practice and the proposed federal and state legislative responses MBA has endorsed. The Federal Housing Finance Agency has weighed in on the Fannie Mae and Freddie Mac side, per the FHFA statement on HOA super-priority lien foreclosures: under 12 U.S.C. 4617(j)(3), FHFA's conservatorship powers preempt any state law that allows an HOA to involuntarily extinguish a Fannie Mae or Freddie Mac lien. This federal preemption applies only to GSE-backed mortgages. Portfolio loans, bank-held loans, hard money loans, and seller-financed loans are not shielded by the FHFA preemption.

For the independent landlord who owns a condo or townhome in any super-priority state on a non-GSE loan, the practical exposure is straightforward. Stop paying HOA dues for six to nine months, and the association can foreclose. The foreclosure extinguishes the first mortgage. The owner is left with a personal liability for the deficiency on the first mortgage, since the bank can still sue personally for the unpaid balance, plus the loss of the property and any equity that had accumulated. The owner may also face a tax consequence on the cancelled mortgage debt if the foreclosure sale price is below the loan balance, under the same IRS discharge-of-indebtedness rules that apply to any foreclosure.

The reason independent owners sometimes get to six to nine months of unpaid HOA dues is not always financial distress. The most common pattern is what the property management industry calls the out of sight, out of mind property. An owner in New Hampshire or New York owns a condo in a Florida or Colorado development they visit once or twice a year. The HOA dues are paid by automatic transfer from a bank account that gets closed during a refi. The owner changes mailing addresses and forgets to update the HOA. The HOA sends notices to the old address. The owner is not aware that dues are unpaid until the association files a foreclosure notice, often with a relatively small dollar amount owed.

The defenses available to the owner once the foreclosure sale has been scheduled are limited. The lender can tender the super-priority amount to stop the sale under the doctrine articulated by the Nevada Supreme Court in the SFR security cases, but the lender has no obligation to do so, and the lender will weigh whether the cost of curing the HOA delinquency is less than the cost of losing the loan entirely. The owner can tender personally, but only if the owner has the cash and learns about the sale in time. The cure period for the owner varies by state. In Nevada, the owner generally has until shortly before the sale to pay (verify Nevada's current cure deadline in the statute before citing a specific number of days). In Colorado, cure-period rules differ — verify Colorado's current cure provision in the statute before comparing — and the CityRuleLookup summary of Denver HOA assessment rules documents that the six-month super-priority component takes priority over first mortgages for assessments that would have become due in the absence of acceleration during the six months immediately preceding the foreclosure action.

The protection an independent owner can put in place before any of this happens is concrete and inexpensive. Pull the most recent HOA estoppel certificate for every condo and townhome in the portfolio. Verify the dues are current to the certificate date. Confirm the mailing address on file with the HOA. Set up an automatic payment from a stable bank account that does not get closed during refis. Maintain a reserve equal to six to nine months of HOA dues in a separate account earmarked for that purpose. For the lender side, confirm with the loan officer whether the loan is GSE-backed. If it is not, ask about HOA super-priority coverage in the lender's title policy. If the loan is GSE-backed, the FHFA preemption applies while the loan is on the GSE's books, but the protection does not automatically follow if the loan is sold into portfolio or transferred to a private securitization.

The gap between the protection an owner thinks they have and the protection they actually have is where this risk lives. Title insurance does not cover it. Mortgage preapproval did not address it. The HOA's governing documents may or may not have addressed it in a way that protects the owner. The protection comes from the owner knowing the structure and acting on it before the association acts on the lien.

Section 2: One Market, One Metric — Nevada, NRS 116.3116, Nine Months

Nevada is the state where the HOA super-priority lien mechanic is most aggressive. Nevada Revised Statutes 116.3116 gives the association a super-priority lien for nine months of unpaid assessments, calculated on a periodic budget basis from the date the notice and claim of lien is recorded. The foreclosure process is non-judicial, meaning the association does not need to go through the court system to conduct the sale. The non-judicial mechanism is faster and less expensive than judicial foreclosure, which is part of why Nevada has produced the largest volume of HOA foreclosure cases in the country, particularly in the Las Vegas Valley and the Reno-Sparks metro.

The Nevada Supreme Court has issued several decisions shaping how NRS 116.3116 operates in practice. The nine-month limitation on Nevada's super-priority lien was clarified in later case law (Horizons at Seven Hills), not established by Shadow Wood itself — cite the statute (NRS 116.3116) and the clarifying decision (see Wright Law Group's analysis of Nevada HOA super-priority case law). The 2017 Nevada Supreme Court ruling on the revival of released super-priority liens, per the Financial Services Perspectives analysis of the case, held that a previously released super-priority lien can be revived, which means a property owner who paid off an old HOA delinquency is not necessarily safe from a new super-priority foreclosure. A 2016 federal court order in the SFR Investments litigation addressed FHA-insured loans on other grounds; it did not bar HOA foreclosure sales generally. The federal foreclosure bar (12 U.S.C. §4617(j)(3)) protects Enterprise (Fannie Mae/Freddie Mac) liens, not FHA-insured loans.

The metric to anchor on this week is nine months. In Nevada, that is the period after which an HOA's super-priority lien can support a non-judicial foreclosure that extinguishes a first mortgage. For independent owners holding a non-GSE loan on a Nevada condo, the nine-month threshold is the line. After nine months of unpaid assessments, the lender's position is at risk in a way the lender may not realize until the foreclosure sale notice arrives.

The reason the metric matters beyond Nevada is that other super-priority states have shorter periods but the same mechanic. Colorado, the District of Columbia, and Illinois operate on six months, as do Florida and several other states in their condominium act frameworks. The dollar amounts differ. The foreclosure mechanisms differ. The core mechanic — that an HOA can extinguish a first mortgage for a small amount of unpaid dues — is consistent across the approximately twenty states that have adopted the UCIOA framework or modeled their statutes on it. The independent investor who treats this as a Nevada-only issue is missing the same exposure in every other state on that list.

Today's 5-Minute Action

Pull the HOA estoppel certificate for every condo and townhome in your portfolio. If you do not currently own a condo or townhome, this issue is informational and the action below applies to any condo you are evaluating for purchase.

Step one: For each condo or townhome you own, contact the HOA management company or the association's board and request an estoppel certificate. In Nevada, the certificate is governed by NRS 116.3116. In Colorado, by C.R.S. 38-33.3-316. In Florida, by Florida Statute 718. The certificate will state the current dues balance, any special assessments, the date through which dues are paid, and any open violations.

Step two: Confirm the mailing address on file with the HOA is current. If the property is managed remotely, confirm the management company's records match your current contact information. Many HOA management contracts require notice to be sent to the address on file, and changing the address without notifying the HOA does not change the legal notice obligation.

Step three: Verify the automatic payment of HOA dues is set up from a stable bank account. If you have closed a bank account during a recent refi and have not redirected the HOA payment, this is the week to do it. The most common trigger for an HOA delinquency is a closed bank account that was the source of the automatic payment.

Step four: For any property in Nevada, Colorado, Florida, Illinois, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Washington, the District of Columbia, or any other super-priority state, calculate six to nine months of dues. That dollar amount is the threshold below which an unpaid assessment can support a non-judicial foreclosure that extinguishes your first mortgage. Write that number in your property file. For a $300 per month HOA, the threshold in Nevada is $2,700 of unpaid dues.

Step five: If you have a non-GSE loan on a property in a super-priority state, ask your lender about HOA super-priority coverage in the title policy. Most policies do not cover it. If your loan is GSE-backed, the FHFA preemption applies while the loan is on the GSE's books. The protection does not automatically follow if the loan is sold into portfolio.

The five minutes you spend pulling estoppel certificates on every condo in your portfolio is the difference between learning about an HOA delinquency from your own records and learning about it from a foreclosure notice. In a super-priority state, the cost of missing this is the property and the first mortgage.