What Are Super Liens and Which States Have Them?
A lien is money you owe to someone that has been placed on your property. A common example of a lien on your home is your mortgage. If you live in a community with an HOA, your HOA can also put a lien on your home if you fail to pay your dues for a long period of time. A super lien is one type of lien that is making waves. Learn what a super lien is, why mortgage lenders don’t like them and which states have them.
What Is a Super Lien?
Generally, if you have multiple liens on a piece of property, such as your home, the liens are repaid in the order in which they were placed. Usually, your mortgage is your first lien. If another lender places an additional lien on your home, it becomes the second lien and so forth. When it’s time to repay, you would repay the mortgage first because it’s the first lien. However, super liens are special. It doesn’t matter when a super lien was placed on the property, it automatically moves to the head of the line. Many states allow HOAs to have their liens become super liens, so they get repaid first.
Why Do Mortgage Lenders Oppose Them for HOAs?
Mortgage lenders don’t like HOA super liens because they feel they are unfair. This isn’t just because the HOA is paid before the mortgage lender. The real problem for mortgage lenders is that sometimes, the HOA super lien can actually cancel the first lien, which is usually the mortgage. In turn, the mortgage lenders could lose a lot of money. Some states are trying to rectify this problem. For example, Nevada passed a law that gives the mortgage lender a little more power. They can actually purchase the property in some cases, so they can resell the home and get back some of their money.
Which States Have HOA Super Liens?
HOA super liens aren’t allowed in every state, but there are many states that do allow HOA super liens. These states include Alabama, Alaska, Colorado, Connecticut, Delaware, Florida, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, Oregon, Pennsylvania, Rhode Island, Tennessee, Vermont, Washington and West Virginia. In addition, the District of Columbia and Puerto Rico also have HOA super liens.
Super liens make it easy for HOAs to recoup their money if a homeowner fails to pay their assessments, but many mortgage lenders feel like they are getting ripped off.
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