What Exactly is a Super Lien?

Articles for the Ambitious Real Estate Investor

A “super lien” is a category of lien that, under a state statute, is given a higher priority than other types of liens. When it comes to HOA liens, a “super lien” refers to that portion of a homeowners’ association lien that’s given higher priority than even a first-mortgage holder, placing the HOA’s interest in front of the first mortgage.

Which Lien Has Priority?

Generally, priority is determined by a lien’s recording date. The general rule is “first in time, first in right.” That is, prior liens have more rights. Some liens, however, like property tax liens, have automatic priority over essentially all other liens. A mortgage’s priority, though, is generally determined by its recording date. Again, in many states, the priority of an HOA lien is determined by the Declaration of Covenants, Conditions and Restrictions (CC&R) recording date or when the assessments were due.

The association’s CC&Rs might contain a provision stating that any HOA lien is subordinate to a first mortgage, even if the mortgage was recorded after the HOA lien was perfected. State law might also determine the priority of an HOA lien. So, HOA liens are often junior to first-mortgage liens. But in some states, an HOA lien gets “super-lien” status, which makes it superior to even a first-mortgage lien.  A super lien is given a higher priority than all other types of liens even the first mortgage holder, placing the interest of the HOA in front of the first mortgage.

State Laws

How many states have super lien laws? Approximately 20 states have laws that give HOA or in some cases COA assessment liens a super lien status under certain circumstances. Every state has different statues.

In general, when a first mortgage lender forecloses subject to a super lien, the HOA gets repaid first out of the sale proceeds up to the allowable amount of the super lien. Then, any additional sale funds go toward paying off the first-mortgage holder.  For example, in Florida, the amount is 12 months of HOA dues preceding the date of the sale or 1% of the original loan amount whichever is less.  In Pennsylvania an amount equal to 6 months preceding the date of the sale.  Every super lien state has different rules so please consult your attorney since the laws constantly change and I am not an attorney. 

In contrast, in the other states that are not super-lien states (examples include North Carolina or South Carolina) the HOA lien gets extinguished in the foreclosure and if the foreclosure sale has excess proceeds over what’s needed to pay off the first mortgage, then the HOA may get some of those funds.

Have Questions?

If you have questions about this article you can connect with Randy here.

Randy Rodenhouse
Author: Randy Rodenhouse

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