Overview

Homeowners attempting a short sale often encounter resistance from their homeowners association over unpaid assessments or a recorded HOA lien. That resistance feels real because, under Civil Code 5675 (which is part of the Davis-Stirling Act), an HOA has the statutory right to record an assessment lien for delinquent dues and to insist that the lien be resolved before releasing it. When a lien remains of record, escrow cannot deliver clear title and title insurers typically will not insure the transaction.

At the same time, your HOA does not have legal authority to approve or deny your short sale contract. The HOA’s leverage comes from lien mechanics, not contract approval. Civil Code 5675 governs the HOA’s assessment lien rights, Civil Code 5685 governs lien release obligations after payment, and Civil Code 5720 limits when the HOA can foreclose. These rules explain why an HOA can stall closing through title mechanics even though it cannot veto the sale itself.

Short sales bring that distinction into sharp focus. Because the sale proceeds will not fully satisfy all outstanding debts, the parties must decide whether the seller, buyer, or lender will fund the HOA payoff. If no one does, escrow stalls. That practical effect leads many homeowners to believe (and certain sloppy attorneys to state or imply) that HOAs have the power to stop short sales even though an HOA’s leverage is limited to lien enforcement and title clearance.

This Fact Sheet explains what your HOA can and cannot do during a short sale, what amounts can lawfully support an assessment lien, how the $1,800 and 12-month thresholds under Civil Code 5720 affect foreclosure, why Civil Code 5680 priority rules and CC&R subordination matter in negotiations, and why senior lender foreclosure often changes the leverage landscape. It also explains practical steps homeowners can take to verify that an HOA’s payoff demand is lawful, preserve their rights in escrow, and prevent improper charges or delays from derailing the transaction.

Key Points

HOA resistance in short sales arises from statutory lien rights and title requirements, not from authority over the sale itself. The following points explain where that leverage comes from, how far it extends, and where it stops. They also highlight practical steps homeowners can take to confirm lien validity, challenge improper amounts, and keep escrow on track.

• An HOA does not have authority to veto or cancel a short sale contract. Neither the Davis-Stirling Act nor typical governing documents grant an HOA the power to approve or deny a homeowner’s purchase agreement. The HOA influences closing through lien mechanics, not contract control.
• An HOA can delay closing if a valid assessment lien remains unresolved. Civil Code 5675 authorizes an HOA to record a lien for delinquent assessments. Once recorded, that lien clouds title. That means that title insurers won’t insure the deal and therefore escrow typically cannot close the transaction unless the lien is resolved or released. This can stall a sale even though the contract itself remains valid.
• An HOA’s leverage in a short sale is lien-based, not approval-based. The HOA does not approve the transaction. Its leverage comes from its statutory ability under Civil Code 5675 to maintain an assessment lien and from Civil Code 5685, which governs when and how that lien must be released after payment (i.e., within 21 days after payment).
• Short sales bring lien mechanics to the foreground. In a traditional sale, lien payoffs usually occur automatically from sale proceeds. In a short sale, insufficient proceeds force negotiation over who will fund the HOA payoff, making lien authority the central pressure point.
• Only delinquent assessments and authorized charges support an HOA assessment lien. Civil Code 5675 allows an HOA lien for delinquent assessments and expressly allows the lien to include collection costs, late charges, and interest only when the HOA assesses them in accordance with Civil Code 5650.
• The HOA must follow pre-lien notice and accounting requirements before recording a lien. Civil Code 5660 requires pre-lien notices and an itemized statement, and Civil Code 5675 requires the HOA to record the itemized statement together with the notice of delinquent assessment.
• Foreclosure thresholds limit foreclosure, not lien recording. Civil Code 5720 bars an HOA from foreclosing unless delinquent regular or special assessments equal or exceed $1,800 or remain unpaid for more than 12 months. Even below that threshold, however, Civil Code 5675 still allows the HOA to record and maintain a lien that clouds title and can stall escrow.
• An HOA assessment lien is generally subordinate to a first deed of trust. While Civil Code 5680 provides that an HOA lien is senior to anything recorded after it, the statute also allows the CC&Rs to voluntarily subordinate the HOA’s interest to other encumbrances. In practice, most California CC&Rs contain mortgage protection or subordination clauses that explicitly place the HOA lien behind a first mortgage. Even in the rare case where such a clause is missing, the first mortgage is almost always recorded years before a specific assessment lien is perfected. This priority structure is critical: it means the HOA is a junior creditor that will likely be wiped out entirely if the senior lender chooses to foreclose instead of cooperating with a short sale.
• Senior lender foreclosure can eliminate an HOA’s lien leverage (so don’t overstate your HOA’s influence). While an HOA lien is a significant cloud on title, some other attorneys have overstated the HOA’s “power” in such situations. In California, if a senior mortgage lender (the first-lien holder) proceeds with a nonjudicial foreclosure (which is done under Civil Code 2924 et seq.), the HOA’s junior assessment lien is typically extinguished (wiped out). In such cases, an HOA “blocking” a sale risks getting $0 if the senior lender loses patience and forecloses. This “wipe-out” risk is the homeowner’s primary leverage to force the HOA to accept a reduced payoff.
• HOAs must weigh lien enforcement against economic reality. An HOA that refuses to negotiate in a short sale may protect its paper position in the short term while increasing the likelihood of receiving nothing if the lender forecloses first. In other words, because a senior lender foreclosure can eliminate the HOA lien and its title leverage, homeowners often use that risk to push for a reduced payoff rather than letting the transaction collapse into a lender foreclosure.
• Many lay people (and some inexperienced attorneys) often mistake leverage for absolute power. Because lien mechanics can stall escrow, homeowners may believe the HOA has total control. In reality, the HOA’s position is constrained by lien priority, foreclosure economics, and the risk of total loss.
• Homeowners facing a short sale and unpaid assessments can take steps to protect their rights. Despite your HOA’s ability to complicate your short sale, there are steps you can take to protect your rights. These include:
  • You should immediately confirm whether your HOA’s lien is valid and properly recorded. Not every HOA demand reflects a valid assessment lien. Homeowners should request and review the recorded notice of delinquent assessment to confirm that the lien exists, that it was recorded under Civil Code 5675, and that it complies with the pre-lien notice requirements imposed by Civil Code 5660.
  • You should demand a detailed accounting of the amounts claimed in the lien. An HOA assessment lien may include only delinquent assessments and statutorily authorized charges. You should require the HOA to itemize: (a) delinquent regular or special assessments; (b) late charges and interest; and (c) collection costs authorized by statute (Civil Code 5675 and Civil Code 5650 govern what may be included) and the governing documents.
  • You should separate lienable amounts from non-lienable charges early. HOAs often bundle fines, penalties, or other non-lienable charges into payoff demands. You should challenge unsupported or illegal assessments and charges before escrow attempts to resolve the lien, and instead that payoff discussions focus only on amounts that lawfully support an assessment lien under Civil Code 5675 or Civil Code 5650.
  • You should assess whether the your HOA has properly met the foreclosure threshold related to your lien. Civil Code 5720 limits an HOA’s ability to foreclose unless delinquent assessments reach $1,800 or remain unpaid for more than 12 months. Even when foreclosure is unavailable, lien leverage may remain, but understanding where the HOA stands under this statute helps frame negotiations and risk.
  • You should evaluate lien priority and wipe-out risk before conceding leverage. Civil Code 5680 governs lien priority and allows CC&Rs to subordinate HOA liens to first deeds of trust. You should determine whether a senior mortgage foreclosure would likely extinguish the HOA lien (in almost all cases, it will), because that wipe-out risk often provides meaningful leverage in short sale negotiations.
  • You should insist on written payoff and written lien-release terms. If you do negotiate a payoff with your HOA, you should ensure that the agreement specifies: (a) the exact amount to be paid; (b) how the payment will be applied; and (c) the HOA’s obligation to record a lien release, as required by Civil Code 5685, which states that your HOA must record a lien release within 21 days after payment of the specified amount.
  • You should document HOA delays or refusals to comply with statutory duties. If an HOA refuses to provide required disclosures, fails to provide a lawful accounting, or delays recording a lien release after payment, document those failures. Such conduct can create leverage and potential remedies if the HOA’s actions interfere with escrow.
  • You should involve experienced HOA counsel before escrow collapses. Short sales move on tight timelines. When an HOA asserts lien leverage improperly or inflates payoff demands, early legal intervention often prevents last-minute escrow failure and preserves negotiating leverage that disappears once a lender initiates foreclosure. That’s when you’ll want to call us at MBK Chapman.

Taken together, these rules explain why HOA resistance can stall a short sale in escrow, even though the HOA cannot veto the sale contract. They also explain why foreclosure thresholds, lien priority, lien release duties, and careful review of payoff demands often determine whether a short sale closes cleanly or collapses.

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About MBK Chapman Fact Sheets

Homeowners searching for answers online will often come across articles that appear authoritative, but are actually written as search-engine marketing content rather than by an experienced HOA lawyer. These pieces tend to prioritize keyword density over clarity, accuracy, or legal context, which often leaves homeowners more confused than informed.

At MBK Chapman, our Fact Sheets are part of our HOA Law Library and are written by Michael Kushner, an HOA lawyer with decades of hands-on experience representing California homeowners. In fact, Michael Kushner is the HOA lawyer who pioneered the systems and strategies used by some of California’s most successful homeowner-side HOA law firms.

Each Fact Sheet is deliberately concise, statute-based, and designed as a quick-reference guide to help homeowners understand key HOA laws and enforcement rules at a glance.

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