If you've fallen behind on your condo or homeowner association (HOA) fees, this might be a shocker for you: Your HOA or condo association might have the right to foreclose on your property.

And even for the vast majority of homeowners who never face foreclosure, the ripple effects of this little-noticed legal development could eventually be costly — in the form of higher interest rates and fees on your mortgage.

In August 2014, the District of Columbia Court of Appeals, the district's equivalent of a state Supreme Court, ruled that not only was a condo association correct in foreclosing on a delinquent owner, but that under super lien rules the bank that holds the mortgage loses its right to the property entirely. A Nevada Supreme Court decision a month later came to the same conclusion.

While those rulings only impact foreclosures in D.C. and Nevada, other state courts could follow their precedent, said Roger Winston, a real estate attorney and partner in the Bethesda, Md., office of law firm Ballard Spahr LLP.

"The court’s decisions have caught everybody off guard,” said Winston, whose firm represented lenders in the Nevada court decision. "It's quite a mess out there."

"Given the massive numbers of delinquencies, lenders weren't moving as quickly as the HOAs would have liked," when it came to foreclosing and making the HOA lien holders whole, said Joey Lubinski, a partner in Ballard Spahr’s Denver office. "If the lender isn’t moving forward to take the title themselves, then the HOA felt it had to step in," he said.

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