The HOA’s Right to Foreclose

Homeowners associations (HOA) in Arizona have a statutory right to enforce the homeowners’ assessment obligations through lien foreclosure. This can be a powerful legal tool—but one that must be handled with care, transparency, and full compliance with state law. The process is governed primarily by A.R.S. § 33-1807 (for planned communities) and A.R.S. § 33-1256 (for condominiums). This article outlines the key steps, legal requirements, and strategic considerations in pursuing lien foreclosure.

1. Establishing the Common Expense Lien

An HOA has the statutory right to place a lien on a member’s property for unpaid assessments, including:

• Assessments;
• Late fees as authorized by the Declaration;
• Reasonable collection fees; and
• Reasonable attorney’s fees and costs (if awarded by a court).

Once an assessment becomes delinquent, the lien is automatically created by operation of law, without the need to record a separate notice of lien. However, to provide public notice, your HOA may also consider recording a Notice and Claim of Lien with the County Recorder. Your HOA’s CC&Rs may also require the HOA to record a Notice and Claim of Lien.

2. Pre-Foreclosure Requirements

Before initiating foreclosure, Arizona law imposes strict conditions:

A. Monetary Threshold

Effective September 26, 2025, under A.R.S. § 33-1807(A), as amended by the Arizona State Legislature this year and signed into law by Arizona’s Governor, planned community HOAs may not begin foreclosure unless:

• Any assessment or portion of the assessment has been delinquent for 18 months or longer, regardless of amount; or
• The total delinquent assessment amount is $10,000 or more, excluding late fees, interest, collection fees and attorney fees and costs.

Under A.R.S. § 33-1256(A), condominium HOAs may not begin foreclosure unless:

• The total delinquent assessment amount is $1,200 or more, excluding late fees, interest, and attorney fees, OR
• Any assessment or portion of the assessment has been delinquent for 1 year or longer, regardless of amount.

B. 30 Day Certified Mail Notice Requirement

Prior to initiating collection action by an attorney (such as foreclosure), Arizona law requires that the HOA to send the owner advance notice of its intent to do so.  See A.R.S. § 33-1807(L) / § 33-1256(L).  The notice must:

• Contain specific language that must be included (boldfaced type or all capital letters); and
• Include the contact information for the person that the member may contact to discuss payment;
• Be sent by certified mail, return receipt requested.

3. Initiating Foreclosure

If the delinquency meets the statutory threshold and all notice requirements are fulfilled, the HOA may file a judicial foreclosure action in the Arizona Superior Court. This is a civil lawsuit:

• Arizona law does not allow non-judicial foreclosure for HOA liens. All Common Expense lien foreclosures must be handled through the judicial process.

4. Court Proceedings and Judgment

If the homeowner does not cure the delinquency after the lawsuit is filed the HOA may obtain a judgment and decree of foreclosure authorizing:

• Extinguishment of all the interests of the parties whose encumbrance are junior in terms of lien priority to the HOA’s Common Expense Lien (such as judgment creditors), and
• Foreclosure of the HOA’s Common Expense Lien to satisfy the amount due to the HOA by selling the homeowner’s property through a County Sheriff’s sale process.

Homeowners have a statutory right to redeem their foreclosed property before the sheriff’s office issues a deed transferring title to the buyer of the property following the sale.

5.  Limitations and Protections

A. First Mortgage Priority

HOA liens are junior to first mortgages/deeds of trust. This means that they remain intact and unaffected by HOA foreclosure proceedings.

B. Bankruptcy and Servicemember Protections

HOA’s must be cautious when the delinquent homeowner has filed for bankruptcy or qualifies under the Servicemembers Civil Relief Act (SCRA). These situations may halt or delay foreclosure efforts.

6. Best Practices for HOA’s

• Always follow strict compliance with statutory notice requirements and monetary thresholds;
• Maintain clear, detailed records of homeowner account histories;
• Avoid selective enforcement; apply collection policies consistently; and
• Consult with qualified HOA legal counsel before initiating any foreclosure of a Common Expense Lien.

Conclusion

Lien foreclosure is an effective remedy to address non-payment of assessments, and often is a necessary step for Arizona HOA’s seeking to protect their financial health and the interests of paying homeowners. When done correctly, the assessment recovery process enforces fairness, maintains community standards, and ensures that all homeowners share equally in the costs of maintaining the neighborhood. Legal counsel can help navigate the process effectively while avoiding potential liability for procedural missteps.

If you have any questions regarding these materials, please reach out to the firm for assistance. Call us toll free at (800) 743-9324 or email moc.w1778148466albdh1778148466c@ofn1778148466i1778148466.

The information contained in this article is not intended to be legal advice and is provided for educational purposes only.