HOA foreclosures jump 40% as insurance costs squeeze budgets

HOA foreclosure filings reached 6,376 in the first quarter, up nearly 40% from two years earlier and rising faster than overall mortgage foreclosure rates, according to real-estate analytics firm Attom.

"HOAs are being forced into more aggressive collections to avoid their own financial collapse," said Brian Fox, co-founder of real-estate technology firm Benutech, which tracks HOA delinquency trends and foreclosures.

HOAs filed more than 285,000 liens last year, up 8.8% from a year earlier, per Benutech. Master insurance policy premiums rose for 91% of community associations between 2024 and early 2025, with 17% seeing jumps exceeding 100%, according to the Foundation for Community Association Research. Reserve funds that were healthy in 2020 have since been depleted by soaring repair costs for items such as roofs.

The squeeze is forcing boards to choose between aggressive collections and cutting maintenance, with consequences for property values across entire neighborhoods. With stricter post-Surfside safety standards requiring structural reserve funding, more associations are expected to pursue foreclosure as a last resort.

At Fairview Condo 1 in Middle Island, N.Y., 15 of 202 units are behind on the $595 monthly dues, creating a monthly shortfall of roughly $8,900 — more than the eight delinquencies the board typically budgets for. Ten of those properties are in foreclosure. "Every delinquency has its own story," said Deborah Amilowski, president of the condo association. Some cases stem from job loss or divorce; others involve investors whose tenants stopped paying rent.

HOA laws vary across states, with most requiring formal notice periods of 30 to 45 days before associations can file liens or initiate foreclosure actions. The Community Associations Institute said many associations offer payment plans and work directly with homeowners facing financial hardship. But in around 20 states, HOA liens carry "super priority" status, giving the association legal priority even over the primary mortgage holder, said Stephen Hladik, a North Wales, Pa., lawyer specializing in foreclosures.

Insurance Premiums Outpace Budgets

The cost pressures extend beyond collections. Marc Schneider, a New York real-estate lawyer representing community associations, recently worked with a Long Island HOA whose annual insurance premium jumped from $60,000 to $360,000. Many older communities that delayed maintenance for decades to keep dues low now face large special assessments to meet stricter safety standards enacted after the 2021 Surfside condo collapse in Florida, including bans on underfunding structural reserve accounts.

State laws can make it difficult for communities to recover money from delinquent residents, said Glen Weinberg, founder of Fairview Commercial Lending. He said he has seen some HOAs pushed to the brink of insolvency because of these laws, including in his home state of Colorado, which caps legal fee reimbursements and imposes strict preforeclosure requirements.

The problem crosses income brackets. In the Las Vegas suburb of Summerlin, a property linked to boxing champion Floyd Mayweather Jr. recently entered HOA foreclosure proceedings after accumulating nearly $25,000 in unpaid dues, interest and legal fees, according to Clark County records. A Notice of Default was filed on behalf of Mountain Trails Community Association after monthly dues went unpaid starting in January 2025. Bobby Samini, a lawyer for Mayweather, said the issue was an accounting oversight and the dues have since been paid.

Legal fees tied to debt collection can add up rapidly for homeowners, creating a financial hole on top of the risk of losing their homes, consumer advocates say. When delinquencies and foreclosures force boards to cut back or delay upkeep, it ultimately hurts property values for the entire neighborhood, Schneider said.

At Fairview Condo 1, the board has been cutting spending rather than tapping cash reserves or levying special assessments. The building has delayed routine projects such as power-washing and planting new flowers. "We have to do what's best for the entire community," Amilowski said.

This article is for informational purposes only and does not constitute investment advice.