How does an HOA collect unpaid dues after a lender forecloses on a home?

By OurHOA · General information · Revised October 18, 2026

What an HOA board can still collect after a lender forecloses: safe harbor caps, surplus and overbid claims, billing the new owner, with TX, FL and CO rules.

Part of the HOA board handbook: treasurer and money.

The short answer

When a first-mortgage lender forecloses on a home that owes the association money, the board's job splits into three parts. First, protect whatever claim the association still has against the property: in Florida a capped amount from the lender, in Colorado up to six months of assessments with priority over the mortgage, and in every state a possible claim to surplus sale money. Second, bill the new owner from the day they take title. Third, decide what to do with the old owner's balance, which usually survives as a personal debt even when the lien does not. Boards lose money here mostly through missed deadlines, not bad law. The surplus claim, the Colorado redemption notice and the first bill to the new owner all have short windows. Rules vary by state and by your declaration, so treat this as education, not legal advice, and send the file to the association's attorney as soon as you learn of a foreclosure. Our guide on HOA lien priority versus a mortgage explains why the lender usually comes first.

Find out about the foreclosure before the sale

Assign one person, usually the treasurer, to check every account more than 90 days past due against county records each month. How you find a foreclosure depends on the state. Texas lenders mostly foreclose without going to court. Under Property Code section 51.002, the sale happens on the first Tuesday of the month between 10 a.m. and 4 p.m., and the notice of sale must be posted and filed with the county clerk at least 21 days before. The statute requires the notice to go to the borrower, not to the association, so the clerk's posted notices are often your only warning. Florida foreclosures go through court, and the association should be named as a defendant, which means the board will be served. Do not ignore that summons. Send it to your attorney the day it arrives. Colorado foreclosures run through the county public trustee, and the association, as a junior lienor, has rights that expire within days of the sale, covered below. If you learn of a sale after it happens, you may already have lost the surplus claim.

What the association can still collect in TX, FL and CO

Florida is the most protective state for associations. Under section 720.3085(2)(c), a first mortgagee that takes title by foreclosure or deed in lieu owes past-due assessments up to the lesser of what accrued in the 12 months before it took title or 1 percent of the original mortgage debt. The cap protects the lender only if it sued and initially joined the association as a defendant. If the lender skipped the association, the cap does not apply. Condominiums have a parallel rule in section 718.116(1)(b), which counts only regular periodic assessments, while the HOA statute also counts special assessments. A third party who buys at the sale is not a mortgagee. Under 720.3085(2)(b) and 718.116(1)(a), that buyer is jointly and severally liable with the previous owner for all unpaid assessments that came due up to the transfer of title. Colorado gives the association lien priority over the first mortgage for up to six months of regular assessments based on the periodic budget, under C.R.S. 38-33.3-316(2)(b). That slice does not include attorney fees, late charges or fines. Texas Property Code chapter 209 has no priority rule for HOAs, so the declaration controls, and many declarations subordinate the assessment lien to a first mortgage. Texas condominiums follow section 82.113(b), which puts a first deed of trust recorded before the assessment became delinquent ahead of the association's lien. In California and other states, read your statute and declaration before assuming anything.

Claim the surplus or overbid on time

When a foreclosure sale brings more than the mortgage debt, the extra money goes to junior lienholders before the former owner. An assessment lien counts, but only if you file. In Florida, section 45.032(1)(b) names an assessment lien as a subordinate lienholder, and section 45.031(1)(a) requires the final judgment to say that a subordinate lienholder must file a claim with the clerk no later than the date the clerk reports the funds as unclaimed. After one year, unclaimed surplus is presumed unclaimed under 45.032(3)(c). Colorado is much tighter. Under C.R.S. 38-38-302(1)(d), a junior lienor must file a notice of intent to redeem within eight business days after the sale, and under 38-38-111(2) only lienors who filed that notice share in the overbid. Miss the eight days and the association has no claim to any of it. Colorado junior lienors can also file a notice of intent to cure at least 15 calendar days before the sale under 38-38-104(1)(d), though few associations want to pay off a mortgage default. Texas has no general statute on surplus from a trustee's sale, so ask your attorney to contact the trustee named in the notice of sale.

Bill the new owner from the day of title

Whoever takes title owes every assessment from that date forward. That includes a lender holding the home as bank-owned property. Pull the deed or certificate of title, set up a new account in the new owner's name, and send the first statement within a week. Do not roll the old balance into the new account. Keep two ledgers: the old owner's closed account and the new owner's open one. In Florida, add the capped or joint-liability amount to the new owner's statement as a separate line, with the dates it covers. A Florida condominium buyer must pay within 30 days after transfer under 718.116(1)(c). Lenders that hold bank-owned homes route bills through a servicer or asset manager. Ask the foreclosure attorney or the closing agent who handles assessments, and mail to the address on the deed as well. Expect an estoppel or resale certificate request when the bank resells. Answer it promptly and accurately. In Colorado, 38-33.3-316(8) gives you 14 calendar days to provide a statement of unpaid assessments, and missing it costs the lien for amounts due on the request date.

Decide what to do with the old balance

Losing the lien does not cancel the former owner's personal debt in most states. The board can sue for it, send it to a collector or write it off. Make that choice by vote, case by case, with the numbers in front of you. A former owner who just lost a home to foreclosure often has nothing to collect, and a judgment that never gets paid only adds legal fees. If the former owner filed bankruptcy, the rules change. Under 11 U.S.C. 523(a)(16), assessments that come due after the bankruptcy filing are not discharged while the debtor still holds a legal, equitable or possessory interest in the unit, but assessments that came due before the filing can be. Our guide on what an HOA board does when an owner files bankruptcy walks through that case. Whatever you decide, record the write-off in the minutes and adjust the budget.

Wording to copy

A first letter to the new owner can read: "Our records show that you took title to [address] on [date]. Regular assessments of $[amount] per [period] are due on the [day] of each [period] under the recorded declaration. Your first statement is enclosed. It shows assessments from your title date forward and, as a separate item, $[amount] in assessments that came due before your title date, which [state law section] makes payable by you. Please contact the treasurer at [email] with any questions." Delete the separate item unless your attorney confirms it applies. A board motion for the old account can read: "Move that the board refer the account for [old owner], lot [number], to the association's attorney to file any surplus or overbid claim from the foreclosure sale on [date], and that the remaining balance of $[amount] be [pursued as a personal claim / written off as uncollectible] after the attorney reports."

A sample timeline

Monthly: compare every account 90 days or more past due against the county's foreclosure filings. Day you learn of a foreclosure: send the file to the attorney, note the sale date, and stop late fees that the attorney says you cannot recover. Before the sale: in Colorado, decide whether to file a notice of intent to cure at least 15 calendar days ahead. Sale day plus one: confirm the result and the bid amount. Within eight business days: in Colorado, file the notice of intent to redeem if there may be an overbid. Within a week of title: open the new owner's account and mail the first statement. Within 30 days: in Florida, file any surplus claim with the clerk rather than waiting for the deadline. Next board meeting: vote on the old balance.

Mistakes boards make

Ignoring a Florida summons because the lender is the one foreclosing. Adding the old owner's full balance to the new owner's bill without checking which rule applies, which invites a dispute. Billing the old owner after the sale for assessments that belong to the new one. Learning about a Colorado sale on day nine. Treating the six-month Colorado priority as covering legal fees and fines, when the statute limits it to regular assessments. Letting the bank-owned home go unbilled for months because nobody knows where to send statements. Each of these costs real money, and each is fixed by one person checking county records monthly and one call to the attorney the day a foreclosure shows up.

Sources

These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.

More on dues & money

Or browse all hoa dues, fees & money guides.