Lien for HOA dues

Started by HeatherJ1 • 5 replies • 2834 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

HeatherJ1 (South Carolina)
Posts: 89

Posted:

We placed a lien on a house years ago for non payment of HOA dues. Finally, the house is going into foreclosure within the next 30 days and we were named as defendents (we the HOA board) but now our president says it will cost more in legal fees then we will get from the HOA dues.

So, what is the point of a lien? I thought the homeowner would be responsible for the legal fees as well. But, I am new to all of this.

Thanks in advance!

TimB4 (Tennessee)
Posts: 21,059

Posted:

Sometimes, the act of filing a lien shows the individual that the Association means business and you get results. Additionally the filing of the lien would ensure the Association got it's money if the house was sold vs. foreclosed on.

Did the individual declare bankruptcy?
Did the individual just walk away from the home?
Does the Association know where the individual is living or working right now?

Typically, depending on how your governing documents are written, the homeowner would be responsible for the legal fees. However, recalling an old saying, you can't get blood from a turnip.

Check with your Association attorney and see what the Associations options are.

It could be possible that your president is telling you the truth.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Here's the deal. The Bank ALWAYS gets paid FIRST no matter IF the HOA forecloses or the bank. It's best the bank does it in most cases unless the homeowner is not behind in their mortgage payments just HOA dues.

The good news is the HOA is in line to get paid. Without the lien it wouldn't have been. So the lien was a good idea. Once the bank forecloses they may pay off the lien or they may just pick up the responsibity of paying the dues. Which most banks wait to the last minute to do that until a new owner purchases the property. New ownership should start over from scatch on dues owed.

The president is correct the HOA is on the hook for the legal fees involved in filing the lien. It probably wasn't alot of money and still has to be paid as part of the amount owed to the HOA besides dues/interest etc... However, is much cheaper than suing and has bigger teeth.

Former HOA President

LynetteB (Texas)
Posts: 141

Posted:

Heather,
So far in our little community, all foreclosures have gone through a title company. When the title company contacts me for amount of dues owed, I give them the full amount because that is what is owed against the property and the property is liened.
We had one where we were actually dealing with Fannie Mae representatives rather than the trustee or realtor and they demanded we release the lien and said it was extinguished. I told them that if it was extinguished then why do I have to release it and they would spend more to have thier lawyer have it removed then if they just paid the balance. They paid it. Directly from Fannie Mae.
Another one though convinced our accountant to pro-rate the amount due from the foreclosure date and they did not pay it. The lien is still there and the new owner didn't know there was one as the title company didn't look for one as they assume the foreclosure will cover the loose ends and remove it.
It took over a year for Fannie Mae to pay but during that time we filed small claims suits against the owners of the foreclosed properties. The lien helped us convince the judge to enter a judgement in our favor. We released the judgement against the one owner after Fannie Mae paid us, and the other is out of State and we are working on a sister state judgement.
We didn't incur any legal fees and didn't have to consult with a lawyer on any of the foreclosures. (but that may not be the case for everyone)

LawrenceC1 (Georgia)
Posts: 480

Posted:

Heather,

If there are not enough proceeds from the foreclosure sale, then the legal fees are a moot point.

The realtor and the closing attorneys get paid, the tax stamps get paid for, recording fees, the first mortgage holder gets paid, and only if there is money left over after all that would the HOA get anything paid against their lien. In today's real estate market, most foreclosures are under water from the start.

LynetteB (Texas)
Posts: 141

Posted:

With the foreclosures that were here, they were all upside down. The bank barely got paid the interest on the loans. The thing that helped us is that they wanted to sell them fast and a lien clouds the title.
I personally am going to keep trying to collect.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here