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The Association’s Decision to Foreclose

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In nearly every case where a first mortgage of record exists on a property, the association’s lien is subordinate or inferior to that mortgage. This means if an association elects to foreclose its lien and takes title to the property, it will take title subject to the right of the first mortgagee to foreclose its mortgage. Associations in the past were reluctant to foreclose when the mortgagee already commenced its own foreclosure action or when the value of the property did not exceed the amount of debt secured by the first mortgage. 

That’s changing now.

Associations are now making the decision to foreclose more often under these circumstances. The primary reason for this is serious delay in the prosecution of the mortgagee’s foreclosure case. These delays are brought on by a variety of factors including the sheer volume of cases handled by the mortgagee’s law firm, protracted efforts to work with the borrower either to short sale the property or modify the loan, problems associated with serving necessary parties with the foreclosure complaint or locating original documents that are to be filed with the court, back log in the courts and even strategic decisions by mortgagees to slow down the process.

In some cases, associations can obtain favorable results when foreclosing, even against properties that have fair market values below their mortgaged amount.  Sometimes the homeowner has the means to pay the association but  has elected to spend money on other concerns.  Because foreclosure results in the owner losing title to the property, if the owner has the means to pay and does not desire to walk away, they pay rather than lose title. 

Foreclosure can be a powerful deterrent for owners who have the means to pay but elect not to or to pay late because they hear others doing the same.  Another option is the association’s right to rent the property once it takes title, if permitted by the association’s governing documents.  For some associations, the rental market is favorable and significant income can be recovered before the mortgagee forecloses and takes title.

Many times the owner cannot or will not pay and rental is not a viable option. However, associations still make the decision to foreclose for any number of reasons. Because so many mortgage foreclosures are being contested by owners raising defenses unique to the mortgage foreclosure action, and thus stalling the mortgage foreclosure case for months or even years, the association can effectively render those defenses moot as they relate to the mortgagee’s foreclosure by foreclosing the association’s lien. When the owner is divested of title by the association, the owner will drop or lose the fight against the lender in the mortgage foreclosure action, thus paving the way for the lender to take title and begin paying assessments.

Another option for associations taking title is negotiating a short sale with the lender or tendering a deed in lieu of foreclosure to the lender.  I have also filed motions in mortgage foreclosure actions notifying the court that the association has taken title and does not contest the mortgagee’s foreclosure, therefore, speeding up the lender’s acquisition of title. These associations understand the key is getting a paying owner into the property sooner rather than later. That way, more in terms of future assessments are recovered rather than lost while a mortgage foreclosure lingers on for years and no one pays the assessments. What every association should consider is each case is different and the association is well served if it carefully considers all of its options and selects a strategy that works best in any given case. In this ever changing environment, there is no one size fits all approach.

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  • Earl Wilson
    October 21, 2010

    It would seem to me that if the Association forecloses on its lien, subject to the first mortgage, the Association becomes the new target for the mortgage company, with assets to go after. Why would the mortgage company pursue foreclosure with deeper pockets on the hook than an unemployed homeowner who only has his house to lose.
    RESPONSE: Simple – the association DOES NOT become liable for the mortgage when it obtains title. The association does not have to pay the mortgage and the lender cannot require the association to pay the mortgage.

    • brent ballard
      August 10, 2015

      A little
      problem with the above statement, until all the superior liens are paid in
      full, the association will not get “CLEAR” title. They will get title
      with encumbrances making the property unsalable and non-transferable. So the
      association should be sure there are sufficient monies to clear all superior encumbrances
      before foreclosing or they will be stuck paying the unpaid superior liens.

  • fran
    October 21, 2010

    What about the problem of the Association being accused by the banks and the owners of rent skimming on property that they do not own? I wouldn’t think taking title through a association lien, does not give the Association a clear title if there is a mortgage on it.
    RESPONSE: Once the association takes title it is recognized as the owner. There are some communities (and law firms advising them) that rent abandoned properties they do not own. There are many problems and exposure to risk by doing so – each community needs to carefully evaluate that risk.

  • Kevin Dickenson
    October 21, 2010

    This is a great idea and will actually help when it comes time to do a short sale because the borrower will be out of the picture. This HOA should immediately list the property for sale and try to get an investor (who is willing to keep the tenant) to put in a short sale offer. The main issue is that the bank has the right to evict the tenant (cash for keys) when they foreclose and the HOA will have a difficult time finding a tenant knowing they could get thrown out at any time. If the unit is at least under contract to a buyer willing to keep the tenant, the probabality of finding a willing tenant is much higher. HOA’s need to carefully consider the legal fees to foreclose vs. rental income. If I were the bank and saw that the borrower was out of the picture and the HOA was in control, I would foreclose as soon as possible because now it’s an easy case.

  • Rose Brill
    October 21, 2010

    Re: In nearly every case where a first mortgage of record exists on a property, the association’s lien is subordinate or inferior to that mortgage.
    Correct me if I am wrong, but Florida is a super lien state, so some portion of an association lien is superior to the lien of a first mortgagee. (i.e. the lesser of 1% or 12 months back assessments).
    Also, how does it work when an association takes title after foreclosing on their lien but takes “subject to” the claims of other like the first mortgagee. I thought that upon change in title, a mortgage is typically accelerated and due. Thanks for your response! [I’m very interested in this topic].
    RESPONSE: The association’s “super lien” status applies when the mortgagee acquires title from the homeowner/borrower and there are amounts outstanding. If the association obtains title, the mortgage is still entitled to foreclose, but in Florida must do so through the Courts or by settlement.

  • Ed Lopez
    October 21, 2010

    Good stuff!!!!

  • diana
    October 25, 2010

    If the association obtains the title through foreclosure of the lien and sells the property, is the new homeowner responsible for paying the old-homeowner’s debt to the bank??? or is the bank foreclosed of any right to the property since it was the association that took the title and sold the property????

  • Barry
    October 26, 2010

    When a Condominium Association forecloses, receives title, then rents the unit can the first mortgage company ask for the court to appoint a receiver?
    RESPONSE: The mortgagee has certain rights. The mortgage usually has a clause contemplating a receiver or the recovery of rents/profits. Here is an excerpt of a 1997 Florida case:
    Appointment of receiver is not matter of right even if mortgage so provides and contains an assignment of rents clause — Alternative methods existed to protect mortgagee’s security interest without depriving mortgagor of its right of possession, including enforcing assignment of rents clause and requiring mortgagor to deposit rents into registry of court

  • Barry
    October 28, 2010

    Since the Condo Association foreclosed and the title is no longer in the mortgagors name, does this mean the first mortgage can require the Condo Association who now holds title by way of its foreclosure on its lien to pay the rents it is collecting into the registry of the court?
    RESPONSE: It depends – many residential mortgages do not contain an “assignment of rents” clause. The mortgagee can foreclose its interest and ask the court to enforce other rights afforded by the mortgage itself, but associations are fighting back against assigning rents to a mortgagee when there is a significant balance on the account.

  • Danielle
    October 30, 2010

    I noticed there is no response to Diana’s question of October 25th. I have the same question.
    Can you please respond?

  • Danielle
    October 30, 2010

    Hi Again,
    Actually my question is a little bit different than Diana’s. If the condo association forecloses and a new owner buys the property at auction, is the new owner responsible for the mortgage/(s) on the property or does he/ she now own it free and clear?
    RESPONSE: The first mortgage doesn’t vanish into thin air. The mortgage can still foreclose against this new owner. Usually the buyer makes arrangements to refinance the property when this happens. Second mortgages and credit lines are ‘wiped-out’ by the association’s foreclosure case though.

  • Ken
    November 13, 2010

    if you are in the arrears on assesments and the Association is trying to foreclose while you have arranged re-financing to pay the arrearage can the Association withhold the standard documentation needed by the lender to re-fi. It would seem to be in direct conflict of the Association’s best interest to do so and to get their money.
    RESPONSE: The association must respond to a request for estoppel information. It is not required to fill out other forms mortgagees use to determine whether to fund the loan.

  • Charles
    November 15, 2010

    In the state of FL, am I understanding correctly that the second mortgage even if filed years before is inferior to the HOA lien? What if the HOA covenants specify that the association’s lien shall be subordinate and inferior to the lien of any mortgage in favor of an institutional lender recorded prior to the recording of a Claim of Lien by the association?
    RESPONSE: The HOA statute contains a ‘super-lien’ provision. However, recent case law (described in some previous posts on this site) shows that the Court may find the governing documents/covenants control over the statute. The lender can make that argument in the lawsuit filed by the association to foreclose its lien.

  • Bill Lorance
    November 18, 2010

    Great forum. My FL neighbor has defaulted on 5 months HOA, since vacated, and now has an HOA superlien. Can I ask the HOA to sell the superlien to me so I can be first bid on the condo w/the bank an then restore the owner to his unit?-Thnx, Bill
    RESPONSE: Sure, the association can assign its lien. You can likewise buy the home in connection with a short sale and/or bid on the property at the foreclosure sale held after the association obtains its final judgment. Both options would require you to pay the outstanding assessments on the account.

  • eli
    November 20, 2010

    If the condo association forecloses and took title , then bank foreclosed and a 3rd party bidder buys the property at auction, the association is joint liable together with the new owner ,That means you owne i owe you the same amount , ends in zero and the association has lose the right to foreclose again on the same debt.Association are being sued beacuse they try to collect full amount . an association need to see on an each case scenario if the property has equity before foreclosing before the bank .

  • Rancy Snyder
    November 27, 2010

    I understand that when a bank forcloses on a condo unit and takes title and pays the 1% owed that all other past due assessments are “wiped out.” However, I cannot find where this is in writing so one can show the board about this. Could you please help with this. Thank you.
    RESPONSE: Liability for delinquent assessments after foreclosure is determined by both the statute and the governing documents. Condo = §718.116, F.S. & HOA = §720.3085, F.S.

  • Othlee
    December 2, 2010

    In the state of Florida if a condo association forclosue and include the owner and the mortgage bank in the forclosure. The property is then sold at auction. My question is can the bank still forclose on the property even though the condo association was granted judgemnt against them in there forcloser?
    RESPONSE: Yes. The first lender can foreclose against the association. Secondary lenders (credit lines, etc.) will not have the ability to foreclose if the association obtained a judgment of foreclosure against them.

  • Dani
    December 7, 2010

    If the HOA takes title to a single family home. Who is insuring the property, homeowner’s insurance. What if a renter or anyone for that matter gets hurt or killed on the property, who is liable?
    RESPONSE: Once the HOA acquires title, it bears responsibility for the maintenance and care of the property. Please discuss the best way to insure the property with the association’s insurance agent.

  • Tammy
    December 7, 2010

    A friend of ours was the successful third party bidder at a HOA foreclosure sale. The bank was not present at the sale. The bid survived the redemption period and the clerk issued him title. It is now known that the property has another HOA lien (the smaller neighborhood ASSO), that is in process of foreclosure. My first question is can the smaller neighborhood Asso foreclose now after the development HOA has already foreclosed? My friend would like to work something out but just learned of the case. Also, the home has a federal tax lien. My second question is what position is the federal tax lien? The house has a 1st mortgage that is much more than the value of the house. My third question is can the bank foreclose on a house with a federal tax lien? Does the lien stay with the house or does it go with the pervious homeowner? My friend would like to work with the bank perhaps make an offer for their interest in the property. Have you heard of anyone doing this?
    RESPONSE: Your friend should sort out all of these issues with the assistance of counsel.
    For the benefit of our other readers – generally you must be aware:
    1. That a bank can foreclose, a master association can foreclose and a sub-association can foreclose. All of them can be in process at the same time.
    2. That if you buy at a foreclosure sale, its more than likely you’ll bear responsibility for payment of outstanding debt.

  • Bob
    December 16, 2010

    Very interesting thread. We recently had an owner pass away and his heirs made the strategic decision not to execute the estate. This left them in arrears for 2 quarterly assessments and left the ownership of the unit in doubt (the bank has not yet foreclosed). There is a renter in the unit who is paying enough to cover the assessments going forward yet we are still owed for past assessments not paid. Two questions: 1) can we raise the rent on the current occupant until the past due obligations are satisfied, and 2) when the bank (1st lien holder) takes possession of the property, are they responsible for the delinquent assessments owed the HOA? If so, are there advantages to us encouraging the bank to take possession by filing a lien on behalf of the HOA? Are there other avenues of restitution?
    RESPONSE: The association can certainly begin its own collection actions. The association is not the landlord and cannot change the terms or conditions of the rental. If the foreclosure is dormant, the association can take action to move it along if it filed an answer in the case. There are several other posts addressing this issue – please read:

  • eli
    December 19, 2010

    association after 3rd party bidder is joint liable as i stated in my post .
    find below the FS
    This means after an association has foreclosed and obtain title cannot collect becasue is joint liable with new owner
    718.116 Assessments; liability; lien and priority; interest; collection.–
    (1)(a) A unit owner, regardless of how his or her title has been acquired, including by purchase at a foreclosure sale or by deed in lieu of foreclosure, is liable for all assessments which come due while he or she is the unit owner. Additionally, a unit owner is jointly and severally liable with the previous owner for all unpaid assessments that came due up to the time of transfer of title. This liability is without prejudice to any right the owner may have to recover from the previous owner the amounts paid by the owner.

  • eli
    December 22, 2010

    I have posted previously ,regading>>>>>>>>>> the a unit owner is jointly and severally liable with the previous owner for all unpaid assessments>>>>>>>>>>>
    I am a CAM manager and the FS are my favorite book and to understand the wording of it sounds a chalenge to me . The statutes speaks by itself . so when I purchased in an auction a CONDO owned apartment I , reading the FS understood that we ( both owners CONDO and ME )are both jointly severally liable. Lets say if I sue condo for 10 dollars and condo have the right to sue me for 10 dollars the maths tells me the debt is zero.If I start the law suit tis can go for ever or a judge can determine something different of what the FS reads . Please advise if this does not bring a conflict with your own bussines, since may be atty should think twice before foreclosing a condo if is almost ready to be foreclosed by the bank.Becasue in two or 3 month the rent collected will be very little .I will glandly wait for your comments
    RESPONSE: Each matter requires its own analysis – both of the legal issues and the business-sense of any action.

  • Marc Prado
    January 19, 2011

    Can a HOA starts a new foreclosure case after a foreclosure action has already being filed by the lender and is a pending case?
    Or the HOA has to join the lender in the same pending foreclosure case filed by the lender.
    RESPONSE:Yes – the association can start an independent foreclosure action. A first mortgagee will name the association as a defendant in its foreclosure case since the association is a junior lien holder.

  • Patty
    January 26, 2011

    From what I understand, if I’m the winning bidder on an HOA auction on a property that has a mortgage, the mortgage holder (bank) can still foreclose on the property. Right? So, my question is, what is the purpose of the 10 day waiting period before the court grants certificate of title? I thought that if the bank didn’t claim anything in those 10 days, I got clear title. Also, how can the bank force me to pay the mortgage if I’m not the one who signed it? Can I try to quiet title to fix this?
    RESPONSE: The first mortgage has priority over the association’s lien for assessments. The bank cannot force you to pay the mortgage, but can certainly foreclose and acquire title to the property.

  • Florida22
    January 28, 2011

    Once the association forecloses on the lien and takes title does the original owner need to continue to pay insurance on the unit? Is there any liability on the original owner or is that the HOA’s responsibility now?
    RESPONSE: Generally the responsibility for the ongoing maintenance and care of the property belongs to the owner of the property.

  • M Miller
    February 7, 2011

    I have a mortgage on a condo in FL. The original amount was 187,500. Paid 208,900. I paid the mortgage on time for 4 years. However after a several car accidents (one in which the other driver was not insured, leaving all medical bills to be paid out of pocket by me) I was not able to keep up with the mortgage and the HOA dues. Currently, the HOA dues are in the rears approximately 11K. After a significant drop in income, I was not able to pay mortgage either. I tried loan modification, re-fi etc. but property value according to tax appraiser is 46K. I have been in the process of short sale for one year. Have negotiated with lender and HOA and settled on an agreement. The day before approval went through the cash buyer grew tired of waiting and canceled the offer. There is an HOA Foreclosure claim of lien against the property/owner. If the HOA intent to foreclose is processed by the court before a short sale takes place and I am forced out of my home will the lien follow me or stay with the property? What is the worst thing that can happen?
    RESPONSE: The answer depends primarily on the mortgage documents. Most Florida mortgages are “recourse” loans, which means the lender can sue you for the balance of the mortgage after it forecloses and sells the collateral. The association has the option of pursuing either a foreclosure or a money judgment. I suggest you obtain legal advice as this problem may impact you for years in the future.

  • calo
    February 11, 2011

    how long does a tenant is given by the association to move out after the HOA forecloses on the condo, is it 90 days as by the obama law signed in 2009.
    RESPONSE: The Protecting Tenants at Foreclosure Act has recently been extended. An association acquiring a property as a result of foreclosure (or deed in lieu of foreclosure) must comply with this law. There is an article about this law in one of the Firm’s recent Community Update publications.

  • Sean
    February 13, 2011

    Great post Kevin Miller. Thanks for the detailed info and responses.

  • Terry
    February 19, 2011

    My condo association filed a foreclosrue judgement against me. The condo was scheduled for sale if the judgement amount was not paid. After asking for a settlement agreement, the association’s attorneys responded to me stating the foreclosure sale would be cancelled and the settlement agreement would be sent to me. The cancellation did not occur. The condo has been sold. It was sold to the condo association. How can the association purchase the condo in this situation? Do I have any recourse since the sale was not cancelled as told to me by the attorneys? What happens to the mortgage? Is there a requirement to notify a lender before a foreclosure by an association? Lastly, what are the next steps, how long do I have to find other living arrangements.

    • Shakti
      September 8, 2014

      Terry, I would like to know what happen , ow did this situation ended?

  • C Morris
    February 22, 2011

    I bought a condo unit in a 55+ community, in a court auction which was foreclosed by the primary bank. I sought legal advice before buying it and the attorney said: as long as the associations were listed in the final judgment of foreclosure, I was not going to be responsible for the previous balance, only for the fees from the moment I bought it. I received already the certificate of title from the court and went to the association and now, they are saying I am responsible for the HOA balance for the 2 associations they have: one for the recreational association and the other one for the Condo association.
    Am I really responsible for them? One attorney said that the recreation association might have been wiped in the foreclosure but I am responsible for the condo association which is 5k+. If I had to pay these amount I am already loosing money what can I do?
    Thank you so much for your advise.
    RESPONSE: Section 718.116, Florida Statutes contains joint and several liability provisions. Generally any third party purchaser at a foreclosure sale becomes liable for the entire outstanding balance on the account. The “safe harbor” provision only applies when the foreclosing lender acquires title.

  • C Morris
    February 22, 2011

    I bought a condo unit in a 55+ community in Palm Beach Florida, in a court auction which was foreclosed by the primary bank. I sought legal advice before buying it and the attorney said: as long as the associations were listed in the final judgment of foreclosure, I was not going to be responsible for the previous balance, only for the fees from the moment I bought it. I received already the certificate of title from the court and went to the association and now, they are saying I am responsible for the HOA balance for the 2 associations they have: one for the recreational association and the other one for the Condo association.
    Am I really responsible for them? One attorney said that the recreation association might have been wiped in the foreclosure but I am responsible for the condo association which is 5k+. If I had to pay these amount I am already loosing money what can I do?
    Thank you so much for your advise.

  • B Dale
    March 2, 2011

    If an individual outbids the lender at the foreclosure sale, and owns the condo. Is he liable for the entire outstanding dues and assessments, or is he considered the lender’s “successor or assigns”, and is only responsible for the lessor of 1% of the mortgage foreclosed on, or 6 months dues? If there is a different rule for the auction bidder versus the lender, then the playing field is not level. It is unfair for the lender who must now own the property that he would otherwise have sold at foreclosure auction, and it is unfair for the purchaser who must pay more than the lender must pay. The statute 718.116 is confusing and somewhat contradicting:
    718.116 Assessments; liability; lien and priority; interest; collection.–
    (1)(a) A unit owner, regardless of how his or her title has been acquired, including by purchase at a foreclosure sale or by deed in lieu of foreclosure, is liable for all assessments which come due while he or she is the unit owner. Additionally, a unit owner is jointly and severally liable with the previous owner for all unpaid assessments that came due up to the time of transfer of title. This liability is without prejudice to any right the owner may have to recover from the previous owner the amounts paid by the owner.
    (b) The liability of a first mortgagee or its successor or assignees who acquire title to a unit by foreclosure or by deed in lieu of foreclosure for the unpaid assessments that became due prior to the mortgagee’s acquisition of title is limited to the lesser of:
    1. The unit’s unpaid common expenses and regular periodic assessments which accrued or came due during the 6 months immediately preceding the acquisition of title and for which payment in full has not been received by the association; or
    2. One percent of the original mortgage debt.
    RESPONSE: The “safe harbor” provision is only applicable to lenders that acquire title via foreclosure or deed in lieu thereof. Third party purchasers are jointly and severally liable for outstanding debt owed to the association.

  • Silvia Armas
    March 11, 2011

    If a condominium in Florida is being foreclosed by the HOA, did the lender Mortgage bank have to be served ?
    Can this be a valid case brought about to the judge at time of hearing if the HOA’s attorney has been extremely overbearing?
    RESPONSE: The association names subordinate lienholders in its foreclosure case, not the first mortgagee.

  • Andres Jara
    March 30, 2011

    Great block.
    Therefore, am I right when I say that I can basically buy as many associations foreclosures though the auction, and collect rents on them until the first lender seeks foreclosures, and obtains final judgment to auction off the properties, if I do not intend to keep them or negotiate a short sale with the bank?
    Thank you
    RESPONSE: Every association has its own rental restrictions. Rental or lease of the unit may not be permitted at all or until after a waiting period. Usually tenants need to be screened and approved and if there is a delinquency associated with the unit the association is entitled to demand rent.

  • Carlos Castillo
    April 11, 2011

    I came across a nice pool home where the HOA had gained title. I found that last year the lender had received a final summary mortgage foreclosure judgment against the owners, and the house went to auction with no bidders. Then a month later the HOA received a default final foreclosure judgment against the previous owners, and also had no bidders. I don’t understand how the HOA could gain title and I’m assuming the lender can regain title through another foreclosure by naming the HOA?
    RESPONSE: The statutes govern these questions. First lenders have options, such as to “re-forclose” to clear the title. Mistakes are made from time to time and there are usually opportunities to correct those mistakes.

  • matt
    April 19, 2011

    if a master association forecloses its lien and subsequently becomes a “unit owner” is the master association then liable for all assessments which came due prior to acquiring title pursuant to 718.116?
    RESPONSE: The statute sets forth limitations on first mortgagee liability for delinquent assessments. The statute says unit owners (depending upon the circumstances of the transfer & the governing documents) are jointly and severally liable with the previous owner for delinquent assessments.

  • Naomi
    April 27, 2011

    If I buy a home at the county’s court foreclosure auction by the HOA and I receive the title, am I responsible for the previous owner’s mortgage?
    RESPONSE: You bear responsibility for any obligations that were not foreclosed by the association. A first mortgage has priority over the association’s lien and therefore is not extinguished in connection with the association’s foreclosure case. There may be other liens on the property that were not released as well.

  • Randy Snyder
    May 9, 2011

    Does a first mortgage have priority over an association’s lien in this scenario? John Doe buys a condo for cash. Six months later he takes out a home equity loan which is the only mortgage recorded on the condo.
    RESPONSE: The statutes do not require the first lender to be a purchase-money lender. Consequently a refinance or later finance can jump in front of the association.

  • SM
    May 18, 2011

    Fantastic site! Really appreciate all the information.
    If an Association forecloses on its assessment lien and takes title to a unit owned by an individual with a mortgage, by doing that has the Association given up their right/ability to then pursue the delinquent amount from the unit owner? Basically, does the Association take title to the unit INSTEAD of the amount that was owed? If the primary bank/mortgagee foreclosed after that point would they (the bank) still be liable for the 12mos/1% regardless?
    Also, can an Association have an assessment lien against a property and then also go out and get a personal judgment against an owner and bring a judgment lien against other property of theirs for the same amount? Thanks in advance.
    RESPONSE: Thanks for the kind comments.
    Your first question is a good one – the association ‘elects’ a remedy in its lawsuit – either foreclosure or a money judgment. However, the association does NOT ever give up its right to pursue a deficiency judgment against an owner when the bank forecloses and only pays 1% or 12 months.
    The association can pursue a money judgment against the owner for any amounts due. That judgement operates the same way any other judgment does – certain property is subject to levy, you may have rights to garnish wages, etc.

  • SM
    May 18, 2011

    A follow-up question to my previous… if the Association has obtained a money judgment against a delinquent owner but has been unable to get paid due to them not having assets, can the Association THEN assert an assessmenty lien and go the foreclosure route? Thanks.
    RESPONSE: Another good point. If the association obtained a money judgment, that judgment covers the amount due up to a certain date. If the owner still owns the unit, the association can seek to foreclose as a result of any delinquencies that arose after the date of the judgment. You have to pick how to collect what you are seeking to collect.

  • Ed Rivas
    May 19, 2011

    I purchased a condo in palm beach court.This condo has a tenant that the associacion has been collecting for one year rent since they got title an year ago after they foreclose the HOA. they put a claim of lien for past due assesments for the last 4 years . I dont understand why if they have extinguish the lien when they foreclose and took title last year . the Fla sts reads joint and severally liable , what this exactly means?
    RESPONSE: Joint and several liability means the new owner (other than 1st mortgagee) is equally responsible with the old owner for delinquencies. If the rent collected from the tenant exceeds the initial delinquency (and funds current assessments) there is no outstanding balance on the account.

  • Maria
    May 23, 2011

    if an association forecloses on its lien and becomes the unit holder, and rents the unit out. Then the 1st mortgage bank institutes an action and the unit is sold at auction to a third party, is the third party responsible for the assessemetns owed to the association under the assocations original lien?
    RESPONSE: The third party is jointly and severally liable with the former owner (Asn), but that liability is without prejudice – meaning that if the new owner pays he/she/it can seek reimbursement from the old owner (Asn.). Any rent collected should be applied to the balance on the account. In a few months you can eat up a significant amount of the balance.

  • maria
    May 24, 2011

    I am interested to know your opinion on the constitutionality of a statute that treats a purchasor bank (i.e, first mortgagee) different from any other purchasor (i.e, investor) acquiring title at a foreclosure auction.
    RESPONSE: There are many, many statutes that treat different “classes” or “entities” differently. I don’t see liability for assessments as an equal protection issue.

  • Mari
    May 24, 2011

    What is the benefit of buy a home at the county’s court foreclosure auction if always the first mortgage lender will be present and can foreclose the property at any time?
    RESPONSE: There are some business reasons, but most of the time its a bad deal for the investor if the property is under-water. The seasoned or experienced investors will generally not bid on any property that is over-leveraged.

  • John Felton
    June 16, 2011

    Can a HOA foreclose if there is a previously existing IRS Federal Tax Lein?
    RESPONSE: It can and the IRS lien has priority over the association’s assessment lien, so the association does not name the IRS in its foreclosure complaint.

  • MiA
    June 23, 2011

    If you purchase a property from the county foreclosure auction and you conducted a title search and the mortgage company listed on the title is no longer in business can you assume that the loan has been sold or no mortgage is present? Also if you purchase a property and their is no mortgage listed on the title search can you assume that this was a property that was owned and then sold to an investor. How can there be no mortgage company listed?
    RESPONSE: You need to submit these questions to whoever performed the title search.

  • Fran
    June 24, 2011

    If there is no mortgage on property and Association files a lis pendens, does that mean it has “elected its remedy”? Is it lawful to also include a remedy of a “money judgment” in the same lawsuit?
    RESPONSE: The association can and usually does file a lawsuit with 2 counts – the first for foreclosure and the second for a money judgment. The association can make its election when it seeks summary judgment.

  • JP
    July 5, 2011

    Thank you for answering all of the above questions.
    I have a condo in Miami that was my primary residence and then I stopped paying both the mortgage and the HOA after I left the area for another job. The bank initiated foreclosure action against me in Sept 2009 that is still ongoing (almost 2 years now). In the meantime, the HOA has foreclosed and now holds the title to the condo. My question is, is the bank’s foreclosure suit against me still valid or does that case get dismissed now? I’m trying to get the bank to go to mediation in court, but is it a moot point if the HOA holds the title? What happens next?
    RESPONSE: You need to consult with an attorney with respect to your situation. The lender can still foreclose and/or seek a judgment against you for the balance due.

  • mariya
    July 20, 2011

    if the association owes the unit, do HOA fees continue to accrue? meaning, does debt to association keep growing?
    RESPONSE: The statutes call for joint and several liability – meaning that a new owner is jointly responsible with the old owner for any delinquency on the account. However, if the new owner pays an old debt, that new owner can seek reimbursement from the old owner – which in this case is the association. There have been several lawsuits filed on this issue recently.

  • gee
    July 22, 2011

    Great info!
    If the HOA forecloses on a condo unit after there is both a primary mortgage and equity line of credit recorded, do both survive the foreclosure for a 3rd party bidder? If so, can the equity line foreclose afterwards over the first mortgage?
    RESPONSE: The HOA generally has priority over any lienor other than the first mortgagee. The HOA has the ability to forclose against the owner of an equity credit line and most associations do include junior lien holders as defendants in lien foreclosure lawsuits.

  • Elena
    July 26, 2011

    My firm has been hired as the CAM Firm for a new condominium. Can I file a Claim of Lien for Assessments on behalf of the association rather that refer the file to an attorney and incur the outrages fees for the preparation of the Claim of Lien?
    RESPONSE: There is a UPL (Unlicensed Practice of Law) ruling by the Supreme Court of Florida that says a manager cannot prepare Claims of Lien. You should be able to work out a reasonable payment for preparation of this document and the required statutory notices. Please do not risk your license (and livelihood) for one client – have them discuss this issue with counsel. It is unfair for a board to ask the manager to do work beyond the scope of CAM management.

  • Pete
    July 27, 2011

    Two days ago our HOA acquired a home that we forclosed on. The property has a pool, the bank never showed and is owed in excess of $500,000. I want to secure the home and insure it untill we or the bank decideds what to do. I think we are on the hook if anything happends to the property or if anyone is injured on the property. I am being told we can not do anything until the court sends us the title. Are we liable now that we are the owners and can we secure and insure it before we get the title in hand. Thanks for any help.
    RESPONSE: Please consult with the association’s insurance advisor. The Certificate of Title will reflect the Association’s ownership of the property. This is an important issue. I know of associations that have been sued as a result of injuries that took place on unoccupied properties.

  • mariya
    August 1, 2011

    if the association foreclosed and incurred attorneys fees, is a 3rd party bidder who bought the first mortgage liable for the attorneys fees the association incurred during their own foreclosure proceeding?

  • mariya
    August 1, 2011

    i bought a property at a foreclosure sale. there is an outstanding debt to the association. the association however can not provide me with a ledger that shows how the debt was incurred. i spoke with the former owner who believes he paid nearly all of the fees that the association is now trying to collect against me. must the association provide me with a ledger in this case before they can go ahead with claim of lien?
    RESPONSE: As an owner you have access to the financial records and can request to inspect (view and copy) those records. You will need to show proof of ownership obviously.

  • Pete
    August 3, 2011

    On july 27,11 you answered my question but I guess I was not very clear. Our HOA was awarded a home in a foreclousre sale that the bank was owed $500,000.plus on. From the date of sale to the date that the title is recieved by us in hand showing ownership who is liable for the property if any onyone is injured or the property is destroyed. Thanks, Pete
    RESPONSE: Title to the home changes with the issuance of the certificate of title. A recorded certificate of title issued to the association as owner means that the association is owner and takes on responsibilities as owner. I understand that associations can purchase endorsements covering this newly acquired property, but you have to consult with your agent.

  • Randy
    August 16, 2011

    Our condo association foreclosed on 2 units. They both have mortgages against them and thus we can’t sell them. Our bylaws do not allow the assocation or unit owners to rent any units. What would be the pluses and minuses to giving a deed in lieu of foreclosure to these mortgage holders?
    RESPONSE: Please discuss the impact with counsel. Generally, it is my experience that the lenders are not very willing to accept a deed from the association in lieu of foreclosure for a number of reasons. Cases have been filed in an attempt to force the lender to accept the deed – some successful and others not – therefore you need an association attorney to go through the options with the board.

  • David
    August 24, 2011

    Thanks for all the info. This is amazing!
    If you are the successful third party bidder at a HOA foreclosure sale, the bank was not present at the sale and the bid survived the redemption period (60 days in FL?) and the clerk issues title does that mean that you are free and clear of the first mortgage?
    If not, how long does it usually take for the first mortgage holder to be able to foreclose on you? does it take as long as a normal foreclosure these days (1-2+ years)?
    RESPONSE: The association’s lien is inferior to the first mortgage (with the exception of the safe harbor) so the first mortgage is not wiped clean as a result of the association’s lien foreclosure.

  • Rose
    March 15, 2012

    My husband purchased 2 condos from the counties online auction prior to doing our homework !!!!!
    My question is…. If the properties have mortgages and we don’t pay them will the forclosures be on our record or the original homeowners ??? I forgot to mention that they were HOA foreclosures. Also one is fully furnished. Do we own the furniture ?
    RESPONSE: A lot of investors have been caught in these types of situations. Obviously you need to do homework before taking the plunge.

    • Jill
      April 4, 2015

      I suggest doing Title due diligence before bidding on the auction. I use http://www.protitleusa.com, they charge $55 for each search.

  • ken hook
    March 27, 2012

    My assoc has a foreclosure date of 4/12/2012. They are unwilling to work with me. is there any way to delay the sale date and force them to work out a payment plan with me
    RESPONSE: You can’t force an association to accept a payment plan but can hire counsel to enter an appearance in the case (if permitted) and file motions with the court.

  • mary margaret
    April 4, 2012

    Can you answer the question if the condo is furnished and you purchased the condo in Florida as a 3rd party bidder at a COA foreclosure, the bank has not yet foreclosed,who owns the furniture??
    RESPONSE: There are several factors involved with regard to the personal property. This blog is for informational and educational purposes only, not a substitution for legal advice with regard to any particular set of facts and circumstances.

  • Kristy
    April 19, 2012

    We hold a second mortgage lien on a condo in Broward county that was foreclosed by the condo association and went back to them for $300 at the sale on 06/21/2011.
    Is our second lien still valid or has it been wiped out? I know if the first lien forecloses, we would be wiped out, but if the HOA did try to sell on a short sale, would they have to deal with our lien also?
    RESPONSE: Please consult with counsel – there are factors here that cannot be evaluated in this forum.

  • rand alan
    May 3, 2012

    Our Condo board has taken title to a unit from the owner due to non payment of maintenance fees. Our Condo has a no rent bylaws for our building of 40 units, now the Board wants to rent only this unit out! Does this violate our condo doucuments for no renting, we have no hardship clause.
    We were told at the last meeting that this was a board issue only, not a unit ownerns concern! Please advise.

  • SLH
    May 11, 2012

    There is a situation where an Association obtained title to a Unit through its own foreclosure action, subject to the mortgage, and currently rents the Unit out. Recently, the Association learned that the AC wasn’t working per the tenants’ complaints. An AC company went out and said that the AC Unit needed to be replaced. The Unit is also now in foreclosure. Can the Association recover the money for replacing the AC Unit upon the sale of the Unit, or would this just be considered a normal cost of maintenance the “owner” hqs to bear?

  • SLH
    May 11, 2012

    There is a situation where an Association obtained title to a Unit through its own foreclosure action, subject to the mortgage, and currently rents the Unit out. Recently, the Association learned that the AC wasn’t working per the tenants’ complaints. An AC company went out and said that the AC Unit needed to be replaced. The Unit is also now in foreclosure. Can the Association recover the money for replacing the AC Unit upon the sale of the Unit, or would this just be considered a normal cost of maintenance the “owner” has to bear?

  • Kevin Dickenson
    June 27, 2012

    My HOA foreclosed on 6 condos subject to the mortgage. I had one of these condos under short sale contract and the bank recently completed the BPO so we were less than 30 days away from lender approval. I let the HOA and their attorney know we were close on the short sale and they should delay the HOA foreclosure action. The HOA foreclosed anyway. The HOA has been sitting with this condo for 6 months and the bank has not foreclosed yet. The borrower is now considering bankruptcy which will delay the banks foreclosure even longer. The HOA spent upwards of $5000 to foreclose and it’s been sitting vacant! If the HOA let my short sale go through, the HOA could collect $33,000 in delinquent HOA dues. When the bank forecloses on the HOA what are they entitled to? From what I’ve read, it sounds like the statutory limit is the LESSER of 12 months of delinquent HOA dues OR 1% of the mortgage amount which is about $5000 in this case. As a result of misguided board actions, this HOA lost $5000 in legal fees, $28,000 in delinquent HOA fees, real estate taxes for 6+ months and 6+ months of HOA dues (my buyer would have closed 6 months ago). Am I missing something?

  • William Kelly
    July 26, 2012

    Condominium association obtains judgment for foreclosure before the lender holding a first lien of mortgage files a lis pendens and foreclosure lawsuit. Sale occurs and Unit is sold at foreclosure auction to a third party. The lender was not named in the condominium lien foreclosure action. Accordingly, the new owner had no notice from the judgment that there was a first mortgage in place. Similarly, the first mortgage was indexed in the public records under a different last name. Has the new owner who purchased at auction simply lost their money and will they be foreclosed out without any sort of remedy?

  • heidi eliasov
    January 22, 2013

    HOA foreclosed on a property going thru an active Short sale, auction was won by an unrelated third party, where does that leave the seller and the buyer?

  • LifeIsAGreat1
    March 13, 2013

    I have been renting a condo from a HOA in Ft. Lauderdale.  The bank was awarded the property in December 2012 by the courts.  I was notified by the HOA manager that the HOA could no longer collect rent because the bank was awarded the property. The bank hired a property management company that I am now dealing with. In February, the HOA manager contacted me stating that I have to pay the HOA rent and back rent because the HOA still holds title to the property. Both parties are stating that I owe them rent. I have asked the HOA to give me some time to address this with the bank and it’s representatives so that I can pay who I owe rent to but they are harassing me for the rent.  Who is legally entitled to the rent?

  • safetymargin
    March 17, 2013

    After foreclosure of Association judgement . 25,000 in excess funds after payment to Association was
    placed in Registry of court …..8,000 is owed to back taxes to Broward county and Tax deed certificate holders can this be paid with the excess funds from registry of court …..Or is the New Certificate title holder responsible with out help from the court ? 

  • Ernie Barker
    May 11, 2013

    We bought an HOA foreclosure and subsequently obtained title. The 2nd mtg was joined and foreclosed out and was also inferior to the hoa lien. The property value is substantially more than the 1st mortgage. I am trying to find the district court ruling that allows third party purchasers to obtain basic mortgage information in order to make an offer and payoff the first mortgage.

  • JerryG2KF
    November 15, 2014

    I’m the treasurer of a Florida HOA with the typical problems collecting on overdue accounts, and read your article with great interest. We’re a neighborhood of just over 200 houses but we have no community center or pool, so our dues are reletively modest. Even so, we have residents who haven’t paid in several years. I thought a good way to know if a delinquent account belonged to a person near foreclosure or not would be to check with a credit reporting agency, but when I called I was informed that our HOA was not eligible to purchase reports. Typically if we file to foreclose on a house that’s near foreclosure with the lender, we can collect only a fraction of what we invest, and we don’t have the wherewithall to take title and rent a house. In most cases we’re better off not trying to foreclose in those cases. But it looks to me that knowing the status of the mortgage is key, but how can we make the determination?

    • Lisa Magill
      November 26, 2014

      The lender’s foreclosure lawsuit is open to the public. Ask your attorney to search the clerk’s records and the public records before you foreclose.

  • POA President
    December 19, 2014

    Here’s one for you to chew on: An owner owns multiple units free-n-clear. He creates an LLC (of which he’s the managing member and sole owner), and sells the units to the LLC, taking back a mortgage for the purchase price, thus making him the 1st mortgagee…with the protections now afforded him under FL statute. So, he now immediately stops paying annual assessments via the LLC, knowing that in the end, when he forecloses (on himself, the LLC) he’ll only be liable, as the 1st mortgagee, for 12 mos of back assessments. Ultimately, the HOA comes up on the short end of the stick, unless maybe it pursues legal remedies (frustration of purpose, perhaps?) which may prove an expensive gamble; one the HOA can’t afford to pursue.

    • Lisa Magill
      December 23, 2014

      Well whenever there is a rule you know there will be those out there just trying to find a way to skirt around it. I’ve heard of this scenario before. There are several options your association can consider – amendments to the governing documents to bolster your position relative to assessment collection, collection of rent from tenants and eviction of those tenants if they don’t pay (reducing income to the owner), suspending use rights for the tenants, etc.

  • Shirley
    January 30, 2015

    I received a foreclosure of Lein in 30 days, my condo is a reverse morgatge, how will that work?

  • john
    April 22, 2015

    Is HOA required to notify the Line of Credit holder against the condo during the foreclosure process? Also, is HOA lien inferior or superior to second mortgage (line of credit)? we purchased a condo through HOA forcloure and later found out there is large amount of loc and the unit is in need of 20k rehab to be livable. But the HOA did not include the bank with loc during the processing. we’ve been paying high hoa fees since the purchase and no extra funds to fix up the place to move in. what are our best options?

  • David
    April 30, 2015

    My association foreclosed on the house next to me. The house is deteriorating. If I owned the property, the association would force me to clean the property or be fined. Do they have the same obligation to maintain a house they foreclose on even tho it is still subordinate to the first mortgage?