Montana HOA Lien Priority: Common Mistakes and How to Avoid Them

Montana HOA Lien Priority: Common Mistakes and How to Avoid Them

Montana has no state statute that establishes a unique priority position for HOA assessment liens. Your association's lien for unpaid assessments follows the general rule that priority is determined by the date of recording in the county clerk and recorder's office. This means your HOA lien does not automatically jump ahead of a mortgage or other recorded interest, and many Montana boards make costly mistakes by assuming otherwise.

The Common Mistake

Boards in Montana often believe that an HOA assessment lien automatically takes priority over a first mortgage when an owner stops paying dues. This belief is incorrect. Montana law treats your assessment lien like any other lien for debt. If the homeowner's mortgage was recorded first, the mortgage holder has priority. If you record your lien before the mortgage, you have priority. The recording date controls.

A second common mistake is failing to record the lien promptly after the assessment becomes delinquent. Some boards wait months or even a full year before filing a lien, assuming that the threat of a lien is enough to compel payment. By the time you record, the homeowner may have refinanced or taken out a second mortgage, and those new lenders now sit ahead of your lien.

What Montana Law Says

Because Montana does not have a specific HOA lien priority statute, your association must follow general Montana lien law and the rules in your governing documents. Your declaration of covenants typically grants the association a lien against any lot for unpaid assessments. That lien becomes enforceable when you record a claim of lien with the county clerk and recorder in the county where the property is located.

Montana Code Annotated does not create a super priority position for HOA liens the way states like Nevada or Colorado do. Your lien competes with all other liens based on recording date. If a bank recorded a mortgage on January 15, 2024, and you record your assessment lien on March 1, 2024, the bank's mortgage has priority. If the property goes to foreclosure sale, the bank gets paid first, and your association may recover nothing.

The Montana Department of Commerce does not regulate HOA lien priority directly, but the Montana Real Estate Commission oversees property transactions and requires that all liens be disclosed in title reports. When a property changes hands, the title company will identify your lien and its position relative to other claims.

Recording Fees and Process

Recording fees in Montana vary by county. As of 2025, most counties charge between 7 and 12 dollars for the first page of a document and 3 to 5 dollars for each additional page. A typical claim of lien runs two to three pages, so you can expect a total recording fee of 13 to 22 dollars per lien. Some counties also charge a small search fee if you request a copy of the recorded document.

You must record your lien in the county where the property is located. If your association includes properties in multiple counties, you must record separate liens in each county. For example, an HOA near Missoula with properties in both Missoula County and Ravalli County must file two separate claims of lien and pay two separate recording fees.

The recording process is straightforward. You prepare a claim of lien that identifies the property by legal description, states the amount owed, and includes your association's name and contact information. You sign the claim, notarize it, and deliver it to the county clerk and recorder's office. Most counties accept documents by mail or in person, and some counties now accept electronic submissions through a statewide portal.

A Montana Example

Consider the Canyon Creek Homeowners Association in Billings. In 2023, a homeowner fell behind on quarterly assessments totaling 1,800 dollars. The board waited nine months before recording a lien, hoping informal collection efforts would work. During those nine months, the homeowner refinanced the property, and the new mortgage was recorded in Yellowstone County. When the association finally recorded its lien in early 2024, the refinance mortgage took priority. The property later went to foreclosure in late 2024, the sale proceeds paid off the mortgage, and the HOA recovered zero dollars from the foreclosure.

This outcome could have been avoided if the board had recorded the lien within 60 days of the first missed payment. Recording early establishes your priority and signals to potential lenders that the property has an outstanding debt.

What Happens in Foreclosure

When a mortgage lender forecloses on a property, all junior liens are typically wiped out unless the junior lienholder intervenes in the foreclosure action. If your HOA lien is junior to the mortgage, you will not recover your debt from the foreclosure sale unless there are surplus proceeds after the senior lien is satisfied. Surplus proceeds are rare in Montana's current real estate market, where many properties sell for amounts that barely cover the mortgage balance.

Your association has the right to file a claim in the foreclosure case and request notice of the sale. You can also bid on the property at the foreclosure auction, although most HOAs lack the funds to do so. If you do not participate in the foreclosure, your lien is extinguished when the property is sold, and you lose your security interest.

Super Assessment Lien Language in Your Documents

Some Montana HOA declarations include language that attempts to create a super priority lien for a limited amount of assessments, often six months or one year of dues. This language is common in declarations drafted using templates from other states. However, Montana courts have not tested whether such language is enforceable against a first mortgage lender who did not agree to subordinate its lien.

If your declaration contains super priority language, do not assume it will protect you in foreclosure. Consult your attorney for your specific situation before relying on that language to collect from foreclosure proceeds.

Protecting Your Association's Interest

Your board should adopt a policy that requires recording a claim of lien within 60 days of any assessment becoming delinquent by more than 90 days. This policy ensures that your lien is recorded promptly and reduces the risk that a homeowner will refinance or take out additional loans that would take priority over your claim.

Maintain a database that tracks each owner's payment status and flags accounts that are approaching the 60 day recording threshold. Assign one board member or your property manager the responsibility to prepare and file liens on schedule. Budget for recording fees and collection costs, including attorney fees if you need to foreclose on your lien or participate in a mortgage foreclosure.

Document every step of your collection process. Keep copies of all delinquency notices, board resolutions authorizing the lien, and proof of recording. This documentation protects your board if an owner later disputes the amount owed or challenges the validity of the lien.

When to Foreclose on Your Lien

Foreclosing on an HOA lien in Montana is expensive and time consuming. You must hire an attorney, file a lawsuit, obtain a judgment, and conduct a foreclosure sale. The process can take six months to a year and cost several thousand dollars. Foreclosure makes sense only if the property has sufficient equity to pay off senior liens and cover your costs.

Before you initiate foreclosure, order a title report to identify all other liens on the property. Calculate whether foreclosure sale proceeds will cover the senior liens, your assessment debt, and your legal fees. If the property is underwater or equity is minimal, foreclosure may not be worth the expense.

Some boards choose to wait for the mortgage lender to foreclose and then attempt to collect the debt from the new owner after the sale. This strategy avoids foreclosure costs but also means you lose your lien and must rely on the new owner's willingness to pay the old debt, which is unlikely.

What You Should Do Now

Review your association's declaration and bylaws to confirm that they grant you a lien for unpaid assessments. Check whether your documents include any super priority language and verify how that language has been interpreted in Montana courts. Create a written collection policy that specifies when you will send delinquency notices, when you will assess late fees, and when you will record a lien.

Contact the clerk and recorder's office in your county to confirm current recording fees and submission procedures. Prepare a template claim of lien that includes all required elements so you can file quickly when an account becomes delinquent. Train your board members and property manager on the importance of timely recording.

Manorway's AI assisted platform helps you track owner payment status, set reminders for collection deadlines, and store copies of recorded liens. When your board uses a system that automates delinquency tracking and document management, you reduce the risk of missing recording deadlines and preserve your priority position. Consult your attorney for your specific situation before recording any lien or initiating foreclosure.