Don’t Hesitate: Update Community Association Liens Now and at the Beginning of Each Fiscal Year
This year community associations of all types saw a significant change to the law that applies to their right to secure payment for outstanding assessments through the filing of liens. Previously, only condominium associations had a priority lien against other lien holders for only six months of assessments prior to the recording of their lien. This new law, contained in a package of foreclosure bills signed by Governor Murphy on April 29, 2019, applies to both condominium and homeowner associations and increases the priority lien available now to both condominium and homeowner associations from only six months of assessment priority to up to 30 months of assessment priority. This means that despite a foreclosure by a lender, the condo association or HOA can receive up to 30 months of assessments out of the lender’s foreclosure. This is a tremendous improvement for both condominiums, who were limited to only six months priority previously, and more impactful to homeowner associations, who had no statutory priority prior to this new law. However, to take advantage of this increase in assessment priority, an association must file liens annually, because the law only allows for six months of assessment priority for every year that an association has a recorded lien, for up to five years. As a result, associations must annually update their liens to maximize the priority of their liens over other lien holders. The increase in the lien priority will make a significant difference and improve an association’s collection efforts going forward.
At Becker we strongly recommend that you update your liens annually, at the beginning of your association’s fiscal year, to ensure the maximum protection and lien priority permitted by law. If you have any questions regarding the new law or this recommendation, please feel free to reach out to our Community Association Practice Group.