Stop Losing Equity: How to Deal with Property Tax and HOA Liens in Middle Tennessee

The Hidden Threat: Priority Liens in Tennessee

When facing mortgage foreclosure, most homeowners focus solely on the bank, but many other debts can lead to the loss of your home. In Tennessee, certain debts—specifically Property Tax Liens and, in some cases, HOA Liens—are considered “priority liens” or “super-liens.” This means they have the legal right to be paid before the mortgage lender and can initiate their own foreclosure action independently of the bank. Failing to address these liens can cost you your equity, even if you manage to avoid the bank’s foreclosure. This is an increasingly common issue in high-growth, planned communities across Rutherford and Sumner Counties.

The Swift and Harsh Reality of Tax Foreclosure

Unlike the typical mortgage foreclosure, which takes several months, Tennessee property tax laws allow for a rapid and decisive action against delinquent properties. County trustees can eventually petition the Chancery or Circuit Court to sell the property to satisfy the tax debt.

• The Problem: The sale price at a tax auction is often only enough to cover the tax debt, interest, and legal fees. If your home is worth $350,000 but only has $5,000 in tax debt, the property could be sold for a fraction of its value, potentially wiping out all your remaining equity.
• The Redemption Period: While Tennessee law provides a right of redemption for tax sales, it can be short and complex, requiring you to pay the full sale price plus interest and penalties to reclaim the property. It is far more financially prudent to sell the property yourself before the tax auction is finalized.

HOA Liens: A Growing Threat in Middle Tennessee

As more homeowners settle in planned communities across areas like Hendersonville and Mount Juliet, Homeowners Association (HOA) liens are a growing source of foreclosure. Most HOA governing documents grant the association a lien against the property for unpaid dues and special assessments. While HOA liens are typically subordinate to the first mortgage, they can still initiate their own foreclosure process under Tennessee law.

• The Trap: Because HOA dues are relatively small, homeowners often overlook them. However, once late fees, legal costs, and attorney fees are added, the debt can escalate quickly into the thousands of dollars, enough to trigger a devastating foreclosure lawsuit.
• The Solution: If you are behind on HOA fees, contact the association immediately to negotiate a payment plan. If the debt is too large, the best option is to sell to a cash buyer who can handle the HOA lien payoff at closing.

The Cash Buyer Advantage: Clearing Liens Simply

When you sell your distressed property to Integrity House Buyers, our process is designed to handle all liens simultaneously, guaranteeing a clear title for the new owner.

1. Lien Payoff Consolidation: We obtain clear payoff statements for the mortgage, county taxes, and any HOA or IRS liens.
2. No Out-of-Pocket Cost: We pay all these debts directly from the cash offer proceeds at the closing table. You never have to find the funds to pay off the County Trustee or the HOA attorney yourself.
3. Maximum Equity Protection: By selling for a guaranteed, market-based cash price, you recover significantly more equity than if your home were sold at a rushed tax or HOA auction.

Connecting Liens to Your Foreclosure Strategy

If you are currently behind on your mortgage, it is highly likely you also have other liens accumulating. Addressing the mortgage without addressing the liens is only a partial solution. If you choose the bankruptcy route, Chapter 13 allows for the repayment of tax liens over five years. (Read more about this legal option here: – Bankruptcy and Foreclosure: Using the Automatic Stay to Buy Time in Middle Tennessee. However, the fastest and most certain way to resolve all debts and protect your equity is a direct cash sale.

Don’t let a small lien cost you your entire home. For a complete strategy on stopping foreclosure and clearing all liens, see our pillar page: How to Stop Foreclosure in Middle Tennessee: Real Options (Even If You’re Behind on Payments).