Homeowners associations can typically secure a judgment lien in Virginia in an attempt to collect unpaid dues from members. However, many homeowners don’t understand what judgment liens are. Some even question whether or not HOAs have the authority to impose such a lien. On the flip side, some board members don’t know how judgment liens work and, thus, impose them incorrectly.
What Is a Judgment Lien in Virginia?
When a homeowner stops paying their dues to an HOA, the HOA has several ways to collect on the debt. These ways can range from imposing late fees to suspending member privileges. In Virginia, associations can even file a judgment lien against the homeowner’s property to secure the debt.
Simply put, a judgment lien is a court ruling that gives the HOA the right to take possession of the homeowner’s property if they fail to make good on their unpaid dues. An HOA does not need the owner’s permission to file a judgment lien. Instead, this lien is automatically attached to the owner’s property without their consent.
Liens make it significantly harder for homeowners to sell their property or refinance their mortgage. A homeowner must settle their debt to release the lien before they can sell or refinance. Additionally, a lien for assessments in Virginia allows HOAs to foreclose on the property to collect the unpaid dues.
Judgment Lien vs Memorandum of Lien in Virginia
A memorandum of lien is somewhat similar to a judgment lien, except a memorandum of lien does not require a court filing. Also known as a Memorandum of Association Assessment Lien, an HOA may file this lien according to state statutes. In Virginia, an association’s ability to file a lien comes from Section 55.1-1833 of the Virginia Property Owners’ Association Act and Section 55.1-1966 of the Virginia Condominium Act.
In terms of priority, a judgment lien sits far below a memorandum of lien. Judgment liens are low-priority liens, so foreclosing on a property does not always guarantee payment. On the other hand, a memorandum of lien is a superior lien and has a higher likelihood of being settled through foreclosure.
How Long Does a Judgment Lien Last in Virginia?
Judgment liens have several benefits, making them a top collection method among HOA communities. Associations may enforce judgment liens on property in Virginia for up to 20 years after the HOA obtains the judgment for unpaid dues. In contrast, HOAs may enforce a memorandum of lien within 36 months from the time of recording.
How Do I Enforce a Judgment Lien in Virginia?
First, an HOA must file a warrant in debt or a complaint in court to create a judgment lien. The association must secure a judgment against the homeowner for the amount of unpaid dues. If the court awards the association with a judgment, it usually includes court costs, attorneys’ fees, and interest.
A judgment does not automatically turn into a Virginia judgment lien, though. An association must file an abstract of judgment with the clerk of the circuit court in the county or city where the property sits. Only then will the lien attach to the homeowner’s property and become a judgment lien.
A benefit of a judgment lien is that an HOA may file the judgment in any county or city where the homeowner owns the property. It is not bound to the county or city where the association resides. Moreover, an HOA may enforce the judgment by garnishing the wages or bank accounts of the homeowner.
Perfecting a Memorandum of Lien in Virginia
Under Virginia law, an HOA may perfect a lien within 12 months from the time the first payment became due. For condominiums, though, the time limit is 90 days. To perfect the lien, an association must file it in the clerk’s office of the circuit court in the county or city where the HOA is located. A principal officer of the HOA must verify the memorandum by oath.
This memorandum should contain the following information:
- The name of the development or association
- Lot description
- The name or names of the homeowner/s
- The amount of unpaid fees currently due or past due relative to such lot, together with the date when each fell due
- Memorandum issuance date
- The association’s name, as well as the name and current address of the contact person (the person who can coordinate the release of the lien)
- A statement that the HOA is obtaining the lien following the provisions of the Property Owners’ Association Act
Before filing this memorandum, the HOA must provide the owner with written notice via certified mail. The association must send this notice to the homeowner’s last known address. The notice must inform the owner that the association intends to file a memorandum of lien with the circuit court clerk’s office in the city or county provided. Finally, the association must send this notice at least 10 days before filing the memorandum of lien.
Can You File Both a Memorandum of Lien and a Judgment Lien in Virginia?
Board members sometimes struggle deciding between a judgment lien and a memorandum of lien. Fortunately, an association may file both a memorandum of lien and a judgment lien in Virginia. This is common practice among homeowners associations, as it is more likely that a delinquent owner will settle their debt this way.
A judgment lien allows the HOA to garnish wages and has a longer enforcement period. Meanwhile, a memorandum of lien has a shorter enforcement period, but it also has higher lien priority and does not require a court ruling to obtain.
That said, HOA boards should review their governing documents, too. Some CC&Rs and bylaws contain provisions that limit the association’s ability to collect unpaid dues or impose additional requirements when it comes to lien filing.
The Final Word
Understanding the distinction between a memorandum of lien and a judgment lien in Virginia is important. In doing so, homeowners associations can practice legal and fair collection methods. On the other hand, homeowners should also be aware of these types of liens, as they may encounter them if they default on their payments.
Cedar Management Group provides HOA management services to homeowners associations and condominiums. Call us today at (877) 252-3327 or contact us online to learn more about us!
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