Kentucky HOA Liens Must Be Recorded, and the 2023 Act Gives No Power to Foreclose

Start by identifying which act your association falls under, because Kentucky has three lien statutes and they do not agree with each other.

If you own a lot in a planned community, the governing sections are KRS 381.785 to 381.801, created by 2023 Ky. Acts ch. 23 and effective June 29, 2023. KRS 381.785(13) defines a planned community as a group of residential dwellings, expressly excluding condominiums, composed of individual lots whose deed, common plan or declaration requires all owners to become members of an association or to support common property by membership fees. KRS 381.786(1) subjects all planned communities in the Commonwealth to the act but preserves any provision already contained in a governing document recorded before June 29, 2023.

KRS 381.799(1) gives that association a continuing lien on the lot for nonpayment of any assessment, special assessment or charge levied under KRS 381.797, together with related interest, fines, administrative late fees, enforcement assessments, collection costs and reasonable attorney fees, once any portion has been unpaid for 30 days. Fines are therefore secured debt in Kentucky rather than a separate collection problem, and so are the association lawyer bills. No section sets a ceiling on any of those amounts. KRS 381.796(4) lets the board set the interest or late fee rate itself, capped only by the maximum rate allowed by law.

Priority is where the Kentucky planned community lien is weaker than owners usually expect. KRS 381.799(2)(b) makes the lien prior to other liens except two categories: liens for real estate taxes and other governmental charges, penalties or assessments, including local government liens filed under KRS 65.8835, and any mortgage, lien or encumbrance recorded prior to the lien recordation. There is no super priority window, no six month or nine month slice ahead of the first mortgage, and no partial priority percentage. Read the words "properly recorded" carefully as well. Unlike the condominium lien, the planned community lien is not perfected by the declaration. The association must charge it and record it with the county clerk, and every mortgage already on record at that moment ranks ahead of it.

The most striking feature of the 2023 act is what it does not contain. Read the whole run from KRS 381.785 through KRS 381.803 and the word foreclose never appears. The General Assembly created a lien and stopped there. An association enforcing it therefore files an ordinary civil action to enforce a lien in circuit court, and KRS 426.005(1) confirms that in such an action judgment may be rendered for the sale of the property and for recovery of the debt against the defendant personally. Meanwhile KRS 381.797(6) gives the board a self help alternative: it may cut a delinquent owner off from the common areas, subject to one limit, in that it may not deny access to any road within the community that is a common area and provides direct access to the owner lot.

Condominium owners sit under a different and considerably stronger lien. KRS 381.9193(1) gives the association a lien from the moment the assessment or fine becomes due, and says in terms that it may be foreclosed in like manner as a mortgage on real estate. Subsection (4) provides that recording the declaration is itself record notice and perfection, so no claim of lien is ever filed. Subsection (2) ranks the lien ahead of everything except encumbrances recorded before the declaration, a mortgage recorded before the date the assessment being enforced became delinquent, and tax and governmental charges. Subsection (5) extinguishes the lien unless proceedings to enforce it are instituted within five years after the full amount becomes due, subsection (7) awards costs and reasonable attorney's fees to the prevailing party, and subsection (8) requires the association to deliver a recordable statement of unpaid assessments within 10 business days of a written request, binding on the association, the executive board and every unit owner. KRS 381.9103(2) extends KRS 381.9193 to condominiums created before January 1, 2011 for events occurring after that date, so an older Louisville or Lexington condominium is on the modern lien even where the rest of the Condominium Act does not reach it.

A condominium still operating under the 1966 Horizontal Property Law also has KRS 381.883, which makes unpaid common expense assessments a lien prior to all other liens except taxes and assessments lawfully imposed by governmental authority and all sums unpaid on first mortgages of record. That wording subordinates the association only to a first mortgage, so a second mortgage loses. It lets the lien be enforced by suit in like manner as a mortgage of real property, entitles the plaintiff to appointment of a receiver to collect a reasonable rental where the bylaws provide for one, and lets the board bid the unit in at the court sale.

Because every route ends in a court ordered sale, the Kentucky judicial sale rules matter as much as the lien statutes. KRS 426.520 requires the commissioner to have the property appraised under oath by two disinterested, intelligent housekeepers of the county before the sale, with the appraisal filed in the record. KRS 426.530(1) then gives the owner six months from the day of sale to redeem if the property did not bring two thirds of that appraised value, by paying the original purchase money, ten percent per annum interest, and the purchaser reasonable post sale costs for maintenance or repair, a list that expressly includes association fees. Under KRS 426.530(3) the buyer takes an immediate writ of possession and a deed carrying a lien reflecting the redemption right.

799 against the lot and may add interest, administrative late fees, enforcement assessments, collection costs and reasonable attorney fees to the balance. 797(6) it may also shut the owner out of pools, clubhouses and other common areas, though not out of a common area road providing direct access to the lot. Enforcement is by the association itself in the circuit court of the county where the land lies, because the 2023 act supplies no administrative process and no nonjudicial sale. 005(1) allows the court to order the property sold and to render judgment for the debt against the owner personally in the same action, so an owner can lose the lot and still owe a deficiency.

9193 lien exists without recording anything and is foreclosed like a mortgage, with costs and reasonable attorney fees to the prevailing party under subsection (7), but it is extinguished if the association waits more than five years from the date the full amount of the assessments became due. 9193(8), which commits the association to the number it states within 10 business days. 520.