Lien priority is generally determined by the recording date of the lien – a “first come, first served” or “first in time, first in priority” basis. Lien priority most commonly becomes an issue during foreclosure actions. If a senior lienholder forecloses, it eliminates any subordinate or “junior” liens.
However, homeowners’ associations (HOA) and condominium associations (COA) require owners to pay certain dues and assessments for common expenses. When these dues are not paid, the HOA or COA can get a lien on the property that could lead to a foreclosure.
While deeds of trust or first mortgages typically have priority over HOA or COA liens, meaning the lender who owns the mortgage has the highest priority, under some circumstances a HOA or COA lien may take priority. These are called “super liens”.
Super Liens in Maryland
- Under Maryland law, if a mortgage or deed of trust was recorded on or after October 1, 2011 and the holder forecloses, lien priority is given to any HOA or COA that holds a lien on the property for four months’ worth of unpaid expenses or $1,200, whichever is less. These assessments do not include collection costs, interest, attorney’s fees, special assessments, or late charges.
- Furthermore, an HOA or COA in Maryland may foreclose an assessments lien in the same manner that a deed of trust or mortgage is foreclosed, through either a judicial or non-judicial process.
- In Maryland, any foreclosure action must be started within 12 years from the date the statement of lien is recorded.
For more information, contact Deardorff, Rath & Pichon, LLC
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