Note Investing in Superior Lien States

Note investing in superior lien states needs to be accounted in your due diligence process. Recognizing which states are superior lien states is the first part of that process. While there are many areas throughout the country that do not have Home Owner Associations (HOAs) or Condominium Owner Associations (COAs), the areas that do should be reviewed during secondary due diligence. Especially when an HOA and/or COA can ultimately foreclose on your collateral if you are note investing in superior lien states.

What are Superior Lien States?

A superior lien state is a state in which HOA or COA liens automatically are placed in 1st position and must be paid back first in the event of foreclosure. These liens are known as super liens. Added to that fact is that in some states a HOA and/or a COA can foreclose on a property in order to satisfy a super liens for outstanding HOA/COA dues. These liens are known as super liens and should be accounted for in your due diligence process.

List of Superior Lien States

From my research I found that the following states have super liens:

• Alabama
• Alaska
• Colorado
• Connecticut
• Delaware
• Florida
• Hawaii
• Illinois
• Maryland
• Massachusetts
• Minnesota
• Missouri
• Nevada
• New Hampshire
• New Jersey
• Oregon
• Pennsylvania
• Rhode Island
• Tennessee
• Vermont
• Washington
• West Virginia

Below is an interactive map to help you quickly review all of the superior lien states and then review the respective state statutes surrounding HOA and/or COA liens.

Interactive Map of Superior Lien States and Statutes

Directions: Click on a superior lien state in the interactive map below to be directed to more information about HOA and/or COA superior liens.

Closing Thoughts

I hope that this map will help you with your note investing due diligence when considering to do note investing in a superior lien state.  If nothing else, add this superior lien review to your due diligence checklist especially if the underlying collateral resides in a HOA or COA. A quick point to make is that if you are investing in a lower band (lower price point) areas, than it is unlikely that the properties will fall under a HOA or COA. However superior liens could be a serious consideration for higher band (higher price point) areas.

If you are new to real estate note investing, you can learn more about what real estate note investing is here. If you would like to dive more into note investing due diligence, check out NoteVestment.com’s Ultimate Guide to Note Investing Due Diligence which is a deep dive into the wide world of note investing due diligence.

As always, thanks for reading!

Disclosure Statement: This article, also called a blog post, contains pertinent information and resource links to legal information, or information that may be construed as legal information, or guidance, aimed at helping the readers of NoteVestment.com with any number of aspects of real estate note investing. While I spend countless hours researching and sourcing the latest information pertaining to this article, or blog post, know that federal and state statutes are subject to change at anytime after the publication of this article, or blog post. Note that I am not a licensed attorney and all information in this post should not be seen as legal advice. You should consult with a licensed attorney to obtain professional legal advice before acting upon any of the information provided in this article, or blog post.