No Super Lien for You: New Case on the Priority of HOA Liens in North Dakota

In a case of first impression, the North Dakota Supreme Court ruled that, despite the language of a declaration of covenants and restrictions to the contrary, a homeowners’ association (HOA) lien for unpaid assessments does not have super priority over a later recorded mortgage. In the Industrial Commission of North Dakota v. Gould, 2024 ND 32, the developer of a housing project recorded a declaration of covenants and restrictions with regard to the homes in the project. The declaration allowed assessments against the homes and granted the HOA a lien against the homes for any unpaid assessments. The declaration specifically provided that an assessment lien would be “superior and senior to any lien hereafter placed upon any portion of the subject property, including the lien of any mortgage or deed of trust.” 

After a homeowner failed to make payment of her assessments, the HOA recorded a notice of a lien for unpaid assessments dating back to September 10, 2019. However, a few days earlier, on September 5, 2019, a lender recorded a mortgage against the home. Relying on the “superior and senior language” in the declaration, the HOA claimed its assessment lien had “super” priority over the mortgage, which was later foreclosed. The court disagreed, finding that because the assessment was not due until five days after the mortgage was recorded, the resulting HOA lien was not senior to the mortgage. In so ruling, the court rejected the notion of a “super lien” for unpaid HOA assessments regardless of the language of the declaration.

Although issue of the priority of HOA liens in North Dakota was resolved by court decision, other states have resolved this issue by statute. For instance, Minnesota Statute § 515B.3-116(b) provides that an HOA assessment lien is prior to later recorded mortgage liens, except for the lien of any first mortgage.