BY JOHN KIRITSIS, ESQ., CPA, MBA, MS, JD, LL.M
In New York City, Homeowners’ Association (HOA) lien priority laws are primarily governed by state laws and the specific governing documents of the HOA. It’s important to note that HOA laws and lien priority can vary depending on the type of development and the rules established by the HOA. Here are some key considerations related to HOA lien priority in New York City:
Governing Documents: The specific lien priority rules for an HOA are typically outlined in the association’s governing documents, which may include the Declaration of Covenants, Conditions, and Restrictions (CC&Rs), and the association’s bylaws. These documents can vary from one HOA to another and can specify the circumstances under which an HOA can place a lien on a homeowner’s property.
Assessments and Dues: HOAs in NYC typically have the authority to collect assessments and dues from homeowners to cover common expenses and maintenance of community amenities. When homeowners fail to pay these assessments, the HOA may have the right to place a lien on the property.
Lien Priority: In New York, HOA liens typically take priority based on the date they are recorded. This means that the first lien recorded will generally have the highest priority, and subsequent liens will be ranked in order of recording. This is known as the “first in time, first in right” principle.
Property Tax Liens: Property tax liens typically take priority over all other liens, including HOA liens. In the event of a property tax lien foreclosure, the taxing authority typically has the first claim on the property’s proceeds.
Mortgage Liens: Mortgage liens typically take priority based on the order of recording with the county clerk. The first mortgage recorded has the highest priority, and subsequent mortgages are ranked in the order they were recorded.
Enforcement and Foreclosure: If a homeowner fails to pay their HOA assessments, the HOA may choose to enforce the lien by initiating a foreclosure action. The specific procedures and timelines for HOA foreclosure actions are outlined in the governing documents and can vary between HOAs.
Bankruptcy Considerations: If a homeowner files for bankruptcy, it can impact the order in which creditors, including the HOA, are paid. Bankruptcy laws can be complex, and it’s important to consult with legal counsel knowledgeable about bankruptcy and HOA lien matters.
It’s crucial for homeowners and prospective buyers in NYC to thoroughly review the HOA’s governing documents and understand the lien priority rules before purchasing a property within an HOA-managed community. If you have questions or concerns about HOA lien priority laws or are facing issues related to HOA assessments and liens, it’s advisable to consult with an attorney experienced in New York real estate law to get personalized guidance and advice specific to your situation.
Citations, References and Potentially Useful Resources for Further Information:
New York State Constitution
Federal Securities Regulation
New York State Martin Act
New York Condominium Act
New York State Security Regulations
New York Business Corporation Law
New York Limited Liability Company Law
New York Uniform Partnership Act
Federal Internal Revenue Code
New York State Tax Laws, Rules & Regulations
New York City Tax Laws, Rules & Regulations
Winston Churchill Owners, Inc. v. Regents Real Estate Associates
Board of Managers of the Park Regis Condominium v. Park Regis Owners Corp.
Park Sutton Condominium v. 447 E. 57th St. LLC
28 E. 10th Street Corp. v. Veras
Riverside Syndicate, Inc. v. Munroe
Essex House Condominium v. Marks
The Parc Vendome Condominium v. Atkinson
54-56 Meserole Street Owners Corp. v. Rossi
The Beekman Regent Condominium v. Bottiglieri
Chelsea 19th LLC v. West 19th Street Realty LLC
New York Department of Finance
New York City Department of Buildings
New York City Bar Association
New York State Bar Association
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