As most of you know, home owners associations (HOAs) have a recurring lien against the homes in their subdivision. That lien secures the payment of assessments. Most of the time, the declarations for the subdivision expressly subordinate that lien to a first mortgage; otherwise, it would be difficult to motivate home lenders to make a loan on a home (e.g. the lenders would be competing with with HOAs for first lien priorty). However, occasionally the lien is not subordinated by the HOA. This will usually be reflected on Schedule B. If that is the case, you should notify the lender, and the lender will likely request that the HOA provide a subordination document.
Monday, February 22, 2010
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