An Arizona HOA foreclosure can take your home, but only after your unpaid assessments cross a specific threshold and only after the association follows a strict notice process that gives you repeated chances to pay. For a planned community, the association cannot foreclose unless you owe at least $10,000 in assessments or have been delinquent for 18 months. For a condominium, the bar is lower: $1,200 or one year of delinquency. And up until 5:00 p.m. on the last business day before the scheduled sale, you can stop the whole thing by paying what you owe plus costs.
Only Unpaid Assessments Can Trigger Foreclosure
The debt that matters is assessments. Fines for rule violations, sometimes called “member expenses,” cannot be enforced as common expense liens and cannot be foreclosed on, no matter how large they grow. An HOA can sue over unpaid fines and record a judgment lien, but that judgment lien still cannot be foreclosed.1Arizona Legislature. Arizona Code 33-1807 – Common Expense Liens Priority Mechanics and Materialmens Liens Notice
Late fees, collection costs, and attorney fees can be added to the total lien, but they do not count toward the dollar threshold for foreclosure. Only unpaid assessment principal counts.
How Much You Have to Owe Before the HOA Can Foreclose
The threshold depends on which kind of community you live in.
- Planned communities: The association can foreclose only if you have been and remain delinquent for at least 18 months, or the unpaid assessments reach $10,000, whichever happens first.1Arizona Legislature. Arizona Code 33-1807 – Common Expense Liens Priority Mechanics and Materialmens Liens Notice
- Condominiums: The association can foreclose if you have been delinquent for one year or owe $1,200 or more in assessments, whichever comes first.2Arizona Legislature. Arizona Code 33-1256 – Common Expense Liens Priority Mechanics and Materialmens Liens Notice Applicability
The HOA lien itself attaches automatically the moment an assessment comes due. No special notice is needed to create the lien, though associations typically record it with the county recorder.2Arizona Legislature. Arizona Code 33-1256 – Common Expense Liens Priority Mechanics and Materialmens Liens Notice Applicability
The Association Must Offer You a Payment Plan
Before filing a foreclosure action, the board must make reasonable efforts to communicate with you and offer a reasonable payment plan. This applies to both planned communities1Arizona Legislature. Arizona Code 33-1807 – Common Expense Liens Priority Mechanics and Materialmens Liens Notice and condominium associations.2Arizona Legislature. Arizona Code 33-1256 – Common Expense Liens Priority Mechanics and Materialmens Liens Notice Applicability The statute does not define “reasonable,” which leaves room for negotiation. If the HOA skips this step entirely and files a foreclosure, you may have grounds to challenge the proceeding.
The Notices You Should Receive
The 30-Day Pre-Collection Notice
Before the HOA hands your account to an attorney or collection agency, it must send a written notice at least 30 days in advance, by certified mail with return receipt requested, to the address on file. The notice has to be printed in boldface or all capital letters and must say that your account is delinquent, that it will be turned over for collection if not brought current within 30 days, and that collection could include foreclosure. It also has to give contact information for someone at the association you can call about payment.1Arizona Legislature. Arizona Code 33-1807 – Common Expense Liens Priority Mechanics and Materialmens Liens Notice
The Notice of Sale
If the debt remains unresolved and the threshold has been crossed, a trustee records a Notice of Sale with the county recorder stating the date, time, and place of the public auction. The sale cannot happen earlier than the 91st day after the notice is recorded.3Arizona Legislature. Arizona Code 33-808 – Notice of Trustees Sale That 91-day window is your last clear stretch of time to resolve the debt before the sale goes forward.
Your Right to Stop the Sale by Reinstating
Arizona law gives you the right to cancel the foreclosure by paying everything you owe before the sale happens. You have until 5:00 p.m. Mountain Standard Time on the last business day before the scheduled sale date.4Arizona Legislature. Arizona Code 33-813 – Default in Performance of Contract Secured Reinstatement
Reinstatement means paying more than just the overdue assessments. You also have to cover the costs the HOA has incurred, which can include:
- Recording and publication costs for the notice of sale and auction notice
- Trustee fees, capped at $600 or one-half of one percent of the unpaid principal, whichever is greater
- Reasonable attorney fees and other expenses incurred to protect the HOA’s interest
Once you pay the full amount in a form the trustee accepts, the foreclosure is cancelled and your account is treated as if no default occurred.4Arizona Legislature. Arizona Code 33-813 – Default in Performance of Contract Secured Reinstatement The right to reinstate also extends to anyone with a subordinate lien on the property, such as a second mortgage holder who wants to protect its interest by paying off the HOA debt.
One more thing to know about payments: when you send money toward a delinquent account, Arizona law directs it first to unpaid assessments, then to assessments that are due but not yet delinquent, then to late charges, then to collection fees and costs, then to court-awarded attorney fees, and finally to fines or penalties.1Arizona Legislature. Arizona Code 33-1807 – Common Expense Liens Priority Mechanics and Materialmens Liens Notice Every dollar you pay works down the assessment principal first, which is the number that controls the foreclosure threshold.
How the Sale Itself Works
Arizona HOA foreclosures are non-judicial. No court oversees the sale. A neutral trustee conducts a public auction under the same statutes that govern deed-of-trust foreclosures generally.
Anyone can bid. Every bidder except the HOA must put up a $10,000 deposit in a form the trustee accepts. The HOA can make a “credit bid” equal to the debt owed rather than putting up cash.5Arizona Legislature. Arizona Code 33-810 – Sale by Public Auction Postponement of Sale The winning bidder, other than the HOA to the extent of its credit bid, must pay in full by 5:00 p.m. Mountain Standard Time on the next business day. The trustee then issues a Trustee’s Deed Upon Sale transferring ownership.
There is no statutory right of redemption after a non-judicial trustee’s sale in Arizona. Once the auction is final, you cannot reclaim the property by paying the debt afterward. The time to act is before the sale.
What Happens to Your First Mortgage
An HOA lien takes priority over most other liens on the property, with three exceptions: liens recorded before the community’s founding declaration, a recorded first mortgage or deed of trust, and liens for real estate taxes and government assessments.1Arizona Legislature. Arizona Code 33-1807 – Common Expense Liens Priority Mechanics and Materialmens Liens Notice The same rule applies to condominiums.2Arizona Legislature. Arizona Code 33-1256 – Common Expense Liens Priority Mechanics and Materialmens Liens Notice Applicability
If the HOA forecloses and sells your home, any first mortgage or deed of trust stays attached to the property. The buyer takes the home subject to that existing debt. Second mortgages, HELOCs, and other junior liens behind the HOA get wiped out. This is why HOA auctions often draw limited bidding, and why the HOA frequently ends up as the winning bidder on its own credit bid.
Surplus Funds After the Sale
If the sale brings in more than the HOA is owed, the extra money is distributed in a set order: costs of sale and trustee fees first, then the debt secured by the trust deed, then any subordinate HOA or condominium lien, then junior lienholders in order of priority, and finally the former owner.6Arizona Legislature. Arizona Code 33-812 – Disposition of Proceeds of Sale
The trustee has 90 days after the sale to distribute the proceeds or deposit them with the county treasurer, and must mail notice of any excess proceeds to the former owner within 15 days of the sale. Unclaimed funds held by the county treasurer are presumed abandoned after two years.6Arizona Legislature. Arizona Code 33-812 – Disposition of Proceeds of Sale If you believe your sale generated surplus funds, do not wait to claim them.
If You Are on Active Duty
The federal Servicemembers Civil Relief Act overrides Arizona’s non-judicial process for active-duty servicemembers. A foreclosure sale on property owned by an active-duty servicemember is not valid during military service or within one year afterward, unless a court has specifically authorized it. A knowing violation is a federal misdemeanor punishable by up to one year in prison.7Office of the Law Revision Counsel. 50 USC 3953 – Mortgages and Trust Deeds
This protection covers obligations entered into before active duty began. If a foreclosure action is filed, the servicemember can request a stay, and the court can adjust the payment obligation based on how military service has affected the ability to pay. Because Arizona HOA foreclosures are non-judicial by default, a servicemember should assert SCRA rights early to force the matter into court where these protections apply.
What a Foreclosure Does to Your Credit
A foreclosure, whether started by a mortgage lender or an HOA, stays on your credit reports for seven years. Under the Fair Credit Reporting Act, the seven-year clock runs from 180 days after the date of the delinquency that led to the foreclosure, not from the sale date.8Office of the Law Revision Counsel. 15 USC 1681c – Requirements Relating to Information Contained in Consumer Reports The underlying delinquency shows up during that period too. Future lenders and landlords routinely check for foreclosure history, and the mark can make a new mortgage significantly harder to obtain for several years.