All about liens

***Please note that we are not attorneys and nothing stated below should be construed as legal advice. If a lien is placed on your property, you should consult with your attorney.***

What is a lien?

Liens are defined in Montana Law under MCA 71.3. But simply put, it is a way for someone to secure the performance of obligations (like paying HOA dues).

Why is the HOA allowed to put a lien on my property?

In terms of Harvest Creek HOA, the HOA is allowed under Montana Law to put a lien on your property because you have a contract with the HOA (MCA 71-3-102). When purchasing your home you acknowledged to have received and read the HOA's governing documents. The CC&Rs outline that you agree to certain obligations and if you fail to meet your obligations the HOA can put a lien on your property as set forth in the Covenants Article IV.

What does the CC&Rs and bylaws say about liens?

The CC&Rs and bylaws are treated as a contract between the property owner and the HOA. Both the property owner and the HOA have certain obligations and restrictions they must adhere to to be in compliance with the contract.

The property owner agrees to pay all assessments and special assessments. Association assessments and special assessments have a whole list of requirements in the CC&Rs, but we will not go into that here. The HOA is required to follow certain timelines and procedures to file a lien.

For what can the HOA put a lien on my property?

Article IV in the Covenants and Article XI in the bylaws both set forth that the HOA can put a lien on your property for any unpaid assessments, interest charges, costs, and reasonable attorney's fees for filing a lien. You will notice that neither provision allows a lien to be placed on your property for late fees and/or for covenant violation fines. Late fees can be included in the debt due to remove the lien but cannot be the only amount listed for the purpose of filing the lien. Covenant violation fines can never be included as part of a lien per the CC&Rs.

What is the timeline for liens?

Article XI in the bylaws state that a lien can be filed after assessments remain unpaid for 3 months after the same became delinquent. Assessments are considered delinquent, per Article IX of the bylaws, 60 days after the assessments are mailed. So the HOA is not allowed to put a lien on your property for 5 months after you first receive a notice to pay your dues. The HOA is required to give notice of the delinquency to the property owner 30 days prior to filing any lien. The notice of delinquency can be given at anytime after the assessments are delinquent.

Who can put a lien on my property?

Only the Association can place a lien on your property. The Association is managed by a Board of Directors. Article II section 3 of the covenants allows the Board of Directors to act on behalf of the association by majority vote. The Board of directors are therefore required to vote to place a lien on any property as evidenced by the minutes of the board of director's meetings. You can verify if the board ever voted to put a lien on your property by viewing the meeting minutes (FYI, the board never voted on any liens). The Association is then required to have the Chairman of the Board, CJ Cook, (or the owner of the property) to sign the notice given to the County Clerk and Recorder that outlines all unpaid assessments, late charges, and interest.

What do I have to pay to remove a lien?

You will be required to pay any unpaid assessments (dues), late fees, interest charges, costs, and reasonable attorney's fees. However, you are only obligated to pay for costs and/or attorney's fees associated with FILING a lien. It would be illegal under Montana law for the HOA to require you to pay any fee or costs associated with removing a lien (MCA 71-3-131). You are under no obligation to pay for any costs or attorney's fees for anything other than filing the lien if you pay prior to foreclosure proceedings. So if the HOA hires an attorney or a property manager to send you a letter, that is the HOA's expense.