Why HOA Foreclosures Are Rising and What Boards Can Do to Protect Their Communities
A Wall Street Journal report published this week documented something that should get every HOA and condo board’s attention. Foreclosure filings tied to unpaid HOA dues are rising sharply, up nearly 40% over two years according to real estate analytics firm Attom, with more than 6,300 properties affected in just the first quarter of 2026 alone. Liens filed by associations topped 285,000 last year, an increase of nearly 9% from the year before, according to Benutech.
In the context of the broader housing market, that number is small. But the direction it points in is not, and boards that get ahead of it now will be in a much better position than those who wait.
Why the Pressure Is Building
What is driving this trend is not a single cause but several converging pressures hitting communities at the same time.
Insurance costs have been one of the most significant. According to the Foundation for Community Association Research, cited in the article, more than nine in ten community associations saw their master insurance premiums increase between 2024 and early 2025, and nearly one in five saw increases of more than 100%. A New York real estate attorney quoted in the piece described one Long Island HOA whose annual premium went from $60,000 to $360,000 in a single renewal cycle.
Reserve funds that were healthy a few years ago have been drawn down by rising repair costs. And post-Surfside safety requirements have forced communities that delayed maintenance for decades to catch up quickly, often through large special assessments that put immediate financial strain on homeowners.
When costs rise faster than budgets can absorb them and reserves are thin, the margin for error shrinks. A handful of delinquent accounts that might have been manageable two years ago can now push a community into genuine cash flow trouble.
The Delinquency Chain
The mechanism behind HOA foreclosures is straightforward. When homeowners stop paying dues, the community still has the same obligations: insurance premiums, vendor contracts, utility bills, reserve contributions. Those costs do not go away. They get redistributed across the owners who are still paying, or they go unmet, which means deferred maintenance, reduced services, and declining property values for everyone.
The communities most exposed are the ones without a clear, consistently followed collection process. A delinquency report reviewed every month, combined with a collection policy applied uniformly to every account, is what keeps small balances from becoming large ones. In many states there are statutory limits on how far back an association can go to collect unpaid assessments. Balances that age past those thresholds become uncollectible, which means the community absorbs the loss directly.
Boards that review their delinquency report monthly, follow up at 30 days, and escalate at 60 days are in a fundamentally different position than boards that address delinquencies only when they become impossible to ignore.
What Boards Can Do Right Now
The broader economic pressures driving this trend are real and largely outside any individual board’s control. What boards can control is how well they are positioned to absorb those pressures. A few practices make a meaningful difference:
- Review the delinquency report every month and follow your collection policy consistently across every account. Uniform enforcement protects the board legally and keeps balances from aging into uncollectible territory.
- Build insurance cost increases into your budget realistically rather than assuming premiums will stabilize. It is also worth making sure your community is completing all recommendations from your insurance provider. Staying current on those requirements helps maintain coverage and can reduce the risk of even larger increases at renewal.
- Fund reserves consistently so the community is not forced into a large special assessment when a major repair arrives. For significant capital projects, financing may still be required, but consistent reserve funding reduces the size of that gap and gives the board more options when the time comes.
- Get monthly financial reports that show actual spending against budget so the board can see cost increases early and make adjustments before they become harder to absorb.
- Look for expenses that can be trimmed or deferred without affecting essential services. With pressures building from multiple directions, every dollar of savings on the expense side is one less dollar that has to come from homeowners.
- Use all of this heading into your next budget cycle. The tension between rising costs and homeowners’ ability to keep up is real, and a budget built with current insurance trends, a realistic reserve contribution, and a clear-eyed view of where expenses can be controlled is the best tool a board has for navigating this environment.
The communities that navigate this environment best are the ones with clear financial systems, consistent processes, and accurate information arriving on time every month. That is not a complicated standard. It is just not universal.
If your board would like to understand whether your current financial setup gives you the visibility you need to stay ahead of these pressures, Community Financials would be glad to have that conversation.
Schedule a consultation or call 833-CONDO-HOA.
Important Disclaimer: This post is for educational purposes only and does not constitute legal, tax, or financial advice. State laws governing HOA collections and foreclosures vary significantly. Always consult a qualified attorney and CPA for guidance specific to your community and state.
