As naïve as it sounds, foreclosure is business, not personal. There are some fundamental questions that need to be asked to curb the passion and focus the decisions on the economics of business. In truth, the Association does not want the foreclosure but rather what results from it, the sale. So we need both the foreclosure and the sale for the Association to be able to get the money it is owed.
Let’s talk a bit about whether the Association should foreclose. Given the past history of property values the foreclosure decision was simple. The difference in the amount of the market value and mortgaged value left significant excess available to settle the assessments from the foreclosure action at the sale. In the current environment of depressed market values, significant portions of the properties in arrears on assessments also have significant mortgages, putting the Association in a disadvantaged position. The disadvantage is lack of equity to foreclose against; making recovery of assessments a bit more complicated and sometimes even fruitless.
The above has to be balanced against the fact that the assessments are the lifeblood of the community to maintain, beautify, and provide the amenities to the members. All members are required to support the community through the payments of assessments. Non-paying members should not be allowed to draw down the community. Therefore, respect for the paying members must be maintained by utilizing the tools available to enforce payment of delinquent assessments from the non-paying members.
The normal process of collections requires a demand letter, a notification of intent to lien, the lien letter and the lien itself. Once the lien is recorded a Condo has up to a year to foreclose, while the Home Owners Association has 5 years. This provides for a unique position for the Association to work with the Unit Owner and to consider owner payment plan options before spending more money which it may have difficulty recovering. If this fails then the only recourse left is to file a lawsuit to foreclose the lien and ultimately sell the property.
My next series of posts will go into greater detail regarding payment plans and the actual foreclosure process.
LienMarket ValueProperty Assessment
Joe
August 11, 2009I found this interesting and thank you. What happens if the HOA follows through the entire process and is awarded certificate of title due to the foreclosure? Are they responsible for the morgage or is it the banks loss since they failed to respond to the notice of sale?
john
August 20, 2009What would your suggestion be if I think an amendment has been improperly made to my HOA covenant and improper assessments are being made based on the amendment? Big threats of foreclosure in the works….
robert dixon
December 16, 2009my association filed foreclosure of a lien for dues. I did not receive any prior notice of the lien having no idea it was there.
I have sent in the full payment including legal fees but they haven’t cashed the check. How do I stop the legal action?
diego
July 1, 2010I was served by the courts in Miami on a lawsuit that the condo association filed against me, I havent paid the association since Sept 2009, I have 10 days left to respond to the court. I also have an appointment August 26th 2010 with mediation, to see if I can reach an agreement with the bank on a loan modification to keep my condo.
With 10 days left to respond to the court, What do you recommend me to state in that letter, and what do I face with the association, but more important how should I adress to the court. thank you very much
Luis
December 6, 2010Hello. I was wondering if you could answer this question I have for you. I got a property in foreclosure in Florida, and the statement I received from title company on the closing date shows that the debts were gonna put up to date. Almost 6 months after that I received a letter from a collection agency with a debt on the property for HOA previous to the date I got it. Should I pay for charges I did not incurred on with the HOA (simply because I was not the owner by then)? Any options you may guide me with?
Thanks in advance. Luis.
RESPONSE: Determining your liability requires an analysis specific to the facts and is not subject to a generalized answer.
nervous nellie
January 27, 2011I am in a horrible mess. My spouse has purchased a property that was foreclosed on by an HOA. The home has a clouded title. There is bank lien on it for $200,000. The home is only worth $180,000. He paid $20,000 for what he thought was a beautiful home, he did not do his due diligence, turns out Well Fargo has filed a lis pendens on it for $200,000. I realize we are in a horrible mess. Whose responsibility is it to pay the following fees from this point forward: taxes, HOA dues, insurance, lawn care….
RESPONSE: The owner of the property bears responsibility for obligations associated with ownership.
Tish
February 26, 2011I have a question regarding an Association foreclosing on a unit.
In this case I would like to give you a summary of what has transpired to date:
February 2010, the owner was served papers from the Association for the unit that he owns next door to where he lives. The owner had a stroke in June of 2009, and his finances suffered somewhat, but he did not advise the tenant of his non-payments to the Association. The tenant was not served at that time. The Attorney for the Association contacted her in July after the law had passed that they were able to collect directly from the tenant. In the conversations, the tenant made arrangements directly with the attorney to pay off the past due fees. The tenant was served with a Summons in October and she replied to the court within 20 days in regards to the arrangements she made with the Association. The tenant has paid up $3,300.00 of a $4,600.00 balance 71%, of which they have also included late fees for months that have had not happened as yet? They have again called them into court for a final answer for a Foreclosure Summons in the 3rd of March, 2011. In the filing they have made no mention of the monies they have collected from the tenant. The checks and money orders that the tenant has sent to the Attorney’s office has all been cashed… What recourse is there and in what ways if any, has the Attorneys who are acting on behalf of the Association, have they, if they have, behaved in a way that is not legal.
Thank You,
RESPONSE: A tenant that pays rent to an association after demand is entitled to a credit (against rent) in the exact amount paid. The owner is entitled to credit against his/her outstanding balance for the amounts paid by the tenant as well. These payments need to be brought to the court’s attention so the final judgment reflects an accurate outstanding balance.
Tish
February 26, 2011I have a question regarding an Association foreclosing on a unit.
In this case I would like to give you a summary of what has transpired to date:
February 2010, the owner was served papers from the Association for the unit that he owns next door to where he lives. The owner had a stroke in June of 2009, and his finances suffered somewhat, but he did not advise the tenant of his non-payments to the Association. The tenant was not served at that time. The Attorney for the Association contacted her in July after the law had passed that they were able to collect directly from the tenant. In the conversations, the tenant made arrangements directly with the attorney to pay off the past due fees. The tenant was served with a Summons in October and she replied to the court within 20 days in regards to the arrangements she made with the Association. The tenant has paid up $3,300.00 of a $4,600.00 balance 71%, of which they have also included late fees for months that have had not happened as yet? They have again called them into court for a final answer for a Foreclosure Summons in the 3rd of March, 2011. In the filing they have made no mention of the monies they have collected from the tenant. The checks and money orders that the tenant has sent to the Attorney’s office has all been cashed… What recourse is there and in what ways if any, has the Attorneys who are acting on behalf of the Association, have they, if they have, behaved in a way that is not legal.
Thank You,