An HOA lien can make a home sale feel more complicated than it really is. The important thing is to find out exactly what is owed, whether the balance has been turned over to collections or an attorney, and what the title company will require before closing.
Across more than 500 real estate transactions, we have seen title issues become expensive mainly when they are discovered late. An HOA balance is usually easier to deal with when everyone knows about it before a contract is signed.
Can you sell a house with an HOA lien?
Often, yes. A sale does not automatically erase the lien, though. The title and escrow process normally has to determine what must be paid or otherwise resolved so the buyer can receive the type of title required by the contract.
Arizona has separate statutes for planned communities and condominiums. A.R.S. §33-1807 addresses common-expense liens in planned communities, while A.R.S. §33-1256 addresses condominium association liens. The details can depend on the type of association, the amount owed, the age of the delinquency and whether a judgment or foreclosure action has already been filed.
This is one reason not to rely on an old HOA statement. Ask for a current payoff or account statement and let the title company review it.
What usually happens during escrow?
Once escrow is opened, the title company searches the public record and gathers payoff information for items that may affect title. If an HOA lien or judgment must be satisfied, the amount may be paid from the seller’s proceeds at closing if the numbers work and the parties agree.
The practical questions are:
- How much is actually owed today?
- Are attorney fees or collection costs included?
- Has the HOA started a foreclosure action?
- Are there other liens, taxes or mortgages that also need to be paid?
- Will the expected sale price leave enough proceeds to clear everything?
Do not assume the amount on the last letter is the payoff
Association balances can change as assessments, collection costs and legal fees are added. Arizona law also provides procedures for requesting account information in certain situations. A licensed title or escrow company can help obtain the figures needed for an actual closing.
What if there is not enough equity?
If the mortgage, HOA balance, taxes, judgments and selling costs exceed the expected proceeds, the transaction may need a different strategy. That could mean negotiating certain debts, bringing money to closing, pursuing a lender-approved short sale when appropriate, or deciding not to sell yet.
Do not sign a contract based only on the gross sale price. The number that matters is what remains after every payoff and closing obligation is accounted for.
Should you repair the property before solving the lien?
Usually the title problem deserves attention first. Spending thousands on cosmetic work does not make an HOA lien disappear. Before putting money into repairs, understand both the property’s condition and the title side of the transaction.
If the house also needs work, see our guide on selling an Arizona house with liens, code violations or title problems.
What to gather before talking with a buyer or agent
- Your most recent HOA statement or collection letter
- Any attorney correspondence
- Mortgage payoff information
- Property-tax information
- Any notices about lawsuits, judgments or foreclosure
- The name and contact information for the association or management company
The faster those documents are available, the faster a title company can identify what is actually required.
Considering an as-is cash sale?
A direct cash sale can remove repair, showing and buyer-financing issues, but it does not bypass valid liens. We still close through a title company and want title issues identified early.
If you want to see whether a direct sale could work with your numbers, request a no-obligation cash offer from Shrubby.
This article is general educational information, not legal advice. HOA and lien issues can be fact-specific. Consider speaking with an Arizona attorney or licensed title/escrow professional about your situation.
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