Montana HOA Foreclosure

Overview

Montana runs foreclosure on two tracks, and one of them dominates residential practice. The Small Tract Financing Act drives that track through a non-judicial trustee's sale, available for real property of 40 acres or less; once the trustee's deed issues, the owner gets no post-sale right of redemption, and no intermediate appellate court stands between the trial court and the Montana Supreme Court.^1,2 Condominiums answer to the Montana Unit Ownership Act, Mont. Code Ann. § 70-23-101 et seq., which creates an assessment lien that ranks junior to a first mortgage or trust indenture of record.³ Non-condominium planned communities operate under recorded covenants, conditions, and restrictions, the Montana Nonprofit Corporation Act, and common-law contract and property principles, because Montana has never enacted a comprehensive planned-community statute and has not adopted the Uniform Common Interest Ownership Act.^4,5 The trustee's-sale sequence is fixed by statute: the association or its lender records and mails a notice of sale at least 120 days before the sale, posts and publishes the notice, and the trustee runs a public auction.^6,7 Federal law overlays the whole process, including the Fair Debt Collection Practices Act as narrowed by Obduskey v. McCarthy & Holthus LLP, the Servicemembers Civil Relief Act, and the Bankruptcy Code's automatic stay.⁸ The result is a creditor-favorable, fast, document-driven system in which procedural compliance, lien priority, and the choice of track decide outcomes.

The statutory framework

The Montana Unit Ownership Act and CC&R-primary planned communities

Montana governs condominiums through the Montana Unit Ownership Act, codified at Mont. Code Ann. § 70-23-101 et seq., which reaches only those properties whose declarants expressly opt in by recording a declaration.⁴ Once it applies, the Act hands an association of unit owners a statutory lien on an individual unit for unpaid common expenses under Mont. Code Ann. § 70-23-607.³ That section spells out the lien's priority: it ranks ahead of all other liens except tax and assessment liens and "a first mortgage or trust indenture of record."³ So Montana grants no statutory super-priority lien, and the association's claim generally sits behind the first lender.³ To perfect the lien, the association must record a verified claim that states the account due, names the owner, and describes the property, indexed in the same records that handle construction liens under Title 71, chapter 3, part 5.³ Foreclosure of that lien runs under Mont. Code Ann. § 70-23-608, which directs the proceedings to "conform as nearly as possible" to construction-lien foreclosures under Title 71, chapter 3, part 5, and separately lets the association sue for unpaid common expenses without foreclosing or giving up the lien.⁹

Non-condominium planned communities rest on thinner statutory ground. Montana has not enacted a comprehensive planned-community statute, and a 2024 Local Government Interim Committee analysis concluded that the Code has historically been "largely silent" on HOA governance, leaving associations to operate mainly under their recorded declarations.⁵ Most associations incorporate as nonprofit corporations under the Montana Nonprofit Corporation Act, Mont. Code Ann. § 35-2-113 et seq., which supplies the corporate-governance rules for boards, meetings, and member rights.¹⁰ A few substantive limits live outside any unified code, including the homeowners'-association restrictions at Mont. Code Ann. § 70-17-901.¹¹ For a non-condominium HOA, the power to assess, lien, and foreclose is contractual — it comes from the recorded covenants, not from a statute — which makes the exact wording of the declaration the controlling document in any enforcement action.⁵

Small Tract Financing Act trustee's sale

The Small Tract Financing Act, Mont. Code Ann. § 71-1-301 et seq., authorizes a trust indenture that conveys real property "of an area not exceeding 40 acres" to a trustee with a power of sale the trustee can exercise after default, and a recital in the indenture that the property does not exceed 40 acres settles that threshold conclusively.¹ Under Mont. Code Ann. § 71-1-304, a beneficiary may foreclose such an indenture either by advertisement and sale under the Act or, at its option, by judicial procedure.¹ The non-judicial track dominates residential practice because it moves faster and sidesteps litigation.

The notice sequence is mandatory. Under Mont. Code Ann. § 71-1-313, the trustee must record a notice of sale and set the sale date at least 120 days after that notice is filed for record, and must mail a copy by certified mail to the grantor and other specified parties at least 120 days before the sale.⁶ Under Mont. Code Ann. § 71-1-315, the trustee must also post the notice on the property at least 20 days before the sale and publish it in a newspaper of general circulation once a week for three successive weeks.⁷ The trustee then sells the property at public auction to the highest bidder.⁶ After a properly conducted trustee's sale, no post-sale right of redemption survives: Mont. Code Ann. § 71-1-318 says the trustee's deed conveys title "without right of redemption."² Choosing the non-judicial track carries one more consequence — Mont. Code Ann. § 71-1-317 allows no deficiency judgment.¹²

Judicial foreclosure, redemption, and federal overlays

Judicial foreclosure under Mont. Code Ann. § 71-1-201 et seq. is required when the security instrument grants no power of sale, when the property exceeds the 40-acre threshold, or when a creditor chooses it.¹ A judgment-creditor sale carries a one-year post-sale redemption right: Mont. Code Ann. § 25-13-802 lets the judgment debtor or a redemptioner redeem "any time within 1 year after the sale" by paying the purchase price plus interest, taxes, and certain expenses.¹³ The two tracks must not be blurred. Mont. Code Ann. § 71-1-228 extends redemption rights to power-of-sale mortgages and deeds of trust, but it carves out trust indentures under the Small Tract Financing Act — the very mechanism that erases redemption after a trustee's sale.¹⁴

Federal law operates on top of both tracks. Under Obduskey v. McCarthy & Holthus LLP, a business that does no more than carry out a non-judicial foreclosure is not a "debt collector" under the full Fair Debt Collection Practices Act, except for the limited reach of 15 U.S.C. § 1692f(6); the safe harbor shields only conduct that state foreclosure law strictly requires, so a collector who steps past those steps loses it.⁸ The Servicemembers Civil Relief Act, 50 U.S.C. § 3901 et seq., authorizes stays and other protections for active-duty servicemembers.¹⁵ The Bankruptcy Code's automatic stay, 11 U.S.C. § 362, halts a foreclosure the moment a debtor files — a point the Montana statute itself recognizes by allowing a trustee's sale to be postponed when a bankruptcy stay intervenes.⁷ On court structure, Montana has no intermediate appellate court: trial-level disputes run through the district courts, and civil appeals go straight to the Montana Supreme Court.¹⁶

The Montana HOA foreclosure procedural sequence

Lien establishment and recording

For condominiums, the lien arises by statute. Under Mont. Code Ann. § 70-23-607, an association of unit owners gains a lien on a delinquent unit for the reasonable value of common expenses once it records a verified claim that states the account due, names the owner, and describes the unit; the claim is recorded and indexed in the lien records used under Title 71, chapter 3, part 5.³ The same section fixes priority, placing the association lien behind tax and assessment liens and behind a first mortgage or trust indenture of record.³ For non-condominium planned communities, no statute creates the lien; the power to assess and to record a lien for unpaid assessments has to appear in the recorded declaration, and the lien's priority and scope answer to that instrument and to general recording law rather than to the Unit Ownership Act.⁵ This single distinction matters most to Montana boards and managers: a condominium association has a statutory hook, while a planned-community HOA has only its covenants.

Pre-foreclosure notice and demand

Montana sets no statutory minimum dollar amount and no months-delinquent threshold for HOA lien foreclosure; those triggers, if any exist, come from the declaration. Where a trust indenture secures the obligation and the association enforces it non-judicially, the controlling pre-sale notice is the 120-day recorded-and-mailed notice of sale under Mont. Code Ann. § 71-1-313, backed by the posting and three-week publication requirements of Mont. Code Ann. § 71-1-315.^6,7 A delinquent owner keeps a statutory cure right: under Mont. Code Ann. § 71-1-312, the owner may cure the default and stop the proceedings by paying the entire amount then due at any point before the sale.¹⁷ For condominium assessment-lien foreclosures routed through the construction-lien machinery of Title 71, chapter 3, part 5 by Mont. Code Ann. § 70-23-608, the notice and process follow that statutory scheme.⁹ Separately, when a third-party collector is involved, the Fair Debt Collection Practices Act governs the dunning communications, and the Obduskey safe harbor shields only the steps the foreclosure statute strictly requires.⁸

Non-judicial trustee's sale or judicial foreclosure

The instrument decides the track. Where a trust indenture within the Small Tract Financing Act secures the assessments, the association or its trustee can proceed non-judicially: after the 120-day notice period under Mont. Code Ann. § 71-1-313 and the posting and publication required by Mont. Code Ann. § 71-1-315, the trustee sells the property at public auction between 9 a.m. and 4 p.m. to the highest bidder, and the beneficiary may enter a credit bid.^6,7 The trustee may postpone the sale by public proclamation, including when a bankruptcy stay under 11 U.S.C. § 362 blocks a timely sale.⁷ Where the security instrument carries no power of sale, or the property exceeds 40 acres, foreclosure proceeds judicially under Mont. Code Ann. § 71-1-201 et seq., with the district court entering a decree and ordering a sheriff's sale.¹ For a condominium association enforcing its statutory lien, Mont. Code Ann. § 70-23-608 routes the proceeding through the construction-lien foreclosure procedures of Title 71, chapter 3, part 5, and also preserves a parallel money action for the debt without foreclosure.⁹ These tracks reach condominiums and planned communities alike, depending on the security instrument — though only condominiums start with the § 70-23-607 statutory lien.³

Post-sale rights and remedies

The post-sale picture turns entirely on the track. After a properly conducted non-judicial trustee's sale, no redemption follows: Mont. Code Ann. § 71-1-318 conveys the trustee's deed "without right of redemption," and the deed's recitals are prima facie evidence of regularity and conclusive in favor of bona fide purchasers.² After a judicial foreclosure and execution sale, by contrast, the one-year redemption right of Mont. Code Ann. § 25-13-802 applies, letting the debtor or a redemptioner buy the property back within one year on statutory terms.¹³ Surplus proceeds from a trustee's sale are distributed under Mont. Code Ann. § 71-1-316, which pays the costs of sale and the secured obligation, then junior lienholders, and sends any remaining surplus to the grantor.¹⁸ Possession follows quickly on the non-judicial track: under Mont. Code Ann. § 71-1-319, the purchaser may take possession on the tenth day after the sale, and anyone who stays is treated as a tenant at will and faces eviction.¹⁹ These remedies apply to both condominium and planned-community foreclosures, with the redemption difference driven by whether the sale was non-judicial or judicial rather than by the type of association.

Recent legislative and judicial activity

No Montana bill and no Montana Supreme Court decision in the relevant windows tackles HOA assessment foreclosure head-on. The items below are the closest qualifying HOA-related measures and rulings, drawn from the 2025 regular session and recent Supreme Court terms. Montana's legislature meets biennially in odd years, so the most recent regular session is the 69th, held in 2025.

Recent bills

Two 2025 bills frame the current landscape — one that the governor signed, and one that the House Judiciary Committee tabled.

Relatedly, House Joint Resolution 50 (2025) requested an interim study of the Uniform Common Interest Ownership Act. It notes that the Local Government Interim Committee "asked members of the Montana Bar Association to review and draft, with input from stakeholders, the Uniform Common Interest Ownership Act," with final results to be reported to the 70th Legislature — a sign that comprehensive HOA legislation stays on the active agenda.²³

Recent appellate rulings

Two recent Montana Supreme Court decisions show how the state's courts read HOA covenants — one tightening what "should consider" language demands, the other construing a "single-family dwelling" restriction against the association.

Active legislative debates

The main debate underway is whether Montana should adopt a comprehensive common-interest statute. The failed HB 619 and the HJ 50 interim study together position UCIOA-style reform for the 2027 session.^22,23 A second thread runs through owner-protection measures such as HB 416's entry restrictions, which reflect legislative interest in reining in HOA authority over members.²⁰

National positioning and related coverage

Montana holds a distinctive spot among foreclosure regimes. It runs two tracks, and its dominant residential mechanism — the Small Tract Financing Act trustee's sale — turns on an unusual 40-acre threshold rather than on loan type; on that non-judicial track it wipes out post-sale redemption entirely, while it preserves a one-year redemption only after a judicial foreclosure.^1,2,13 That sets Montana apart from UCIOA states, where the model act's § 3-116(c) makes the association lien "prior to" even a first mortgage, up to the common-expense assessments that would have come due in the six months before an enforcement action; Montana grants no such super-priority and keeps the association behind the first lender.^26,3 It also stands apart from judicial-only states that attach substantial redemption periods to every sale, and from reform states that have written detailed common-interest codes. With no comprehensive planned-community statute, no UCIOA, no community association manager licensing, and no intermediate appellate court, Montana makes the recorded declaration and strict statutory compliance the decisive factors in any enforcement.^5,16

For practitioners, the takeaways are direct: lien priority favors the first lender, the non-judicial track moves on a 120-day clock and forecloses redemption, and the controlling text is almost always the association's own recorded declaration. Anchor every Montana collection and foreclosure decision on those three points until the legislature revisits common-interest reform.

1. Mont. Code Ann. § 71-1-304, Trust indentures authorized — power of sale for breach in trustee (40-acre limit; election of advertisement-and-sale or judicial foreclosure) ↩
2. Mont. Code Ann. § 71-1-318, Trustee's deed (conveys "without right of redemption"; recital effect) ↩
3. Mont. Code Ann. § 70-23-607, Claim for common expenses — priority of lien — contents — recording (lien prior to all liens except tax/assessment liens and "a first mortgage or trust indenture of record") ↩
4. Montana Unit Ownership Act — Condominiums, Mont. Code Ann. Title 70, ch. 23 (Table of Contents) ↩
5. Montana Local Government Interim Committee, "HOA Governance in Montana" (Jan. 24, 2024) (Code "historically...largely silent" on HOA governance; associations organize under Title 35, ch. 2; the Unit Ownership Act not treated as the HOA statute) ↩
6. Mont. Code Ann. § 71-1-313, Conditions for foreclosure by advertisement and sale (sale date "not less than 120 days" after notice recorded; certified-mail notice; public auction) ↩
7. Mont. Code Ann. § 71-1-315, Notice — sale — payment (mailing 120 days before sale; posting 20 days before; publication once each week for 3 successive weeks; postponement, including for the 11 U.S.C. § 362 automatic stay) ↩
8. Obduskey v. McCarthy & Holthus LLP, 586 U.S. ___, 139 S. Ct. 1029 (2019) (entity engaged in no more than non-judicial foreclosure is not a "debt collector" except for 15 U.S.C. § 1692f(6)) ↩
9. Mont. Code Ann. § 70-23-608, Foreclosure of lien under claim for common expenses — action without foreclosure (proceedings conform to Title 71, ch. 3, pt. 5; money action preserved) ↩
10. Mont. Code Ann. § 35-2-113, Short title (Montana Nonprofit Corporation Act) ↩
11. Mont. Code Ann. Title 70, ch. 17, pt. 9, Restrictions Pertaining to Homeowners' Associations (§ 70-17-901 et seq.) ↩
12. Mont. Code Ann. § 71-1-317, Deficiency judgment not allowed (no deficiency after non-judicial foreclosure of a trust indenture), listed in Title 71, ch. 1, pt. 3 Table of Contents ↩
13. Mont. Code Ann. § 25-13-802, Time for redemption — amount to be paid (redemption "any time within 1 year after the sale") ↩
14. Mont. Code Ann. § 71-1-228, Rights of redemption applicable (redemption rights apply to power-of-sale mortgages/deeds of trust except trust indentures under the Small Tract Financing Act) ↩
15. Servicemembers Civil Relief Act, 50 U.S.C. § 3901 et seq.; see also Mont. Code Ann. § 10-1-903 (state-court stay/adjustment authority for servicemember mortgage nonpayment) ↩
16. Montana Judicial Branch, court structure (District Courts as trial courts of general jurisdiction; Montana Supreme Court as the state's only appellate court) ↩
17. Mont. Code Ann. § 71-1-312, Discontinuance of foreclosure proceedings when entire amount of default paid (cure before sale), listed in Title 71, ch. 1, pt. 3 Table of Contents ↩
18. Mont. Code Ann. § 71-1-316, Disposition of proceeds of sale — notice — surplus funds — attorney fees, listed in Title 71, ch. 1, pt. 3 Table of Contents ↩
19. Mont. Code Ann. § 71-1-319, Possession (purchaser entitled to possession on the 10th day after sale; remaining occupant is tenant at will), listed in Title 71, ch. 1, pt. 3 Table of Contents ↩
20. Montana HB 416 (2025, 69th Legislature), An Act providing requirements for a homeowners' association to seek permission for entry on real property (codified in Title 70, ch. 16, pt. 1) ↩
21. "Local lawmakers help limit power of HOAs," Montana Right Now (HB 416 signed into law by Gov. Greg Gianforte on May 5, 2025) ↩
22. Montana HB 619 (2025, 69th Legislature), to establish the Uniform Common Interest Ownership Act (introduced text) ↩
23. Montana House Joint Resolution 50 (2025, enrolled) (HB 619 tabled in House Judiciary; requesting interim study of the Uniform Common Interest Ownership Act for report to the 70th Legislature) ↩
24. Waddell v. Studer, 2025 MT 269 (Mont. Nov. 25, 2025) (covenant "should take into consideration...neighboring dwellings, with allowance for views" creates an obligation of good-faith consideration; summary judgment and fee award reversed) ↩
25. Clover Meadows Homeowners Ass'n, Inc. v. Spear, 2024 MT 102N (Mont. May 14, 2024) (noncitable memorandum opinion; affirming summary judgment and fee award for homeowner on "single-family dwelling" covenant) ↩
26. Uniform Common Interest Ownership Act § 3-116(c) (association lien "prior to" a first mortgage to the extent of six months of common-expense assessments) — Uniform Law Commission ↩