What can HOA claim against foreclosed owner?

Started by WarrenH • 8 replies • 1766 views

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WarrenH (Illinois)
Posts: 4

Posted:

It's a simple 3 units building in Chicago, IL. One owner owed about 2 years of assessments, but recently, his unit was foreclosed. Can the HOA go after the ex-owner or can the HOA go after the new owner (bank) for back assessments unpaid? What can be done and how? Please help!

TimB4 (Tennessee)
Posts: 21,059

Posted:

State laws differ therefore, you will need to check them.

Typically, if a member didn't have a job, bank account or money to pay the mortgage, then the member probably doesn't have any money funds for the Association to go after. Even if the member does have a job, etc. you will need a court order to garnish the wages. For this the Association will need to go to court with an attorney. Since this usually costs more than is actually collected, most associations tend to write off the debt. The Association should consult with an attorney for available options and the associated costs of those options.

The new owner (the bank in this case) will owe assessments from the time they took legal possession of the property, forward. The bank or any future owner is not responsible for past due assessments incurred by previous owners.

I know it's not really what you wanted to hear.

I hope it helps,

Tim

WarrenH (Illinois)
Posts: 4

Posted:

Thanks a bunch for the excellent answer. Appreciate your help greatly, this is a great site.

WarrenH (Illinois)
Posts: 4

Posted:

And a quick side note/question, in a 3 units HOA, can one person be president, secretary, and the treasurer?

WarrenH (Illinois)
Posts: 4

Posted:

Would a lien on the property be legal?

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By WarrenH on 04/23/2012 7:09 PM
Would a lien on the property be legal?

A lien would need to be filed prior to the foreclosure as the lien would be against the owner of the property. If the bank now owns the property, a lien is no longer an option.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By WarrenH on 04/23/2012 6:43 PM
And a quick side note/question, in a 3 units HOA, can one person be president, secretary, and the treasurer?

I did not see anything within IL Condominium Property Act that would prevent this. If your Association is incorporated as a nonprofit (most are) then the IL General Not For Profit Corporation Act of 1986 would also be applicable and that act defers to your governing documents. Therefore, it will depend on what your governing documents allow. Typically, this would be located within your Bylaws.

Warren, per IL corporate law, the Association is to have three directors. With only three units, how does this work within your Association?

Tim

LarryB13 (Arizona)
Posts: 4,099

Posted:

As Tim stated above, "Even if the member does have a job, etc. you will need a court order to garnish the wages. For this the Association will need to go to court with an attorney."

This means filing a lawsuit seeking a judgment for the unpaid assessments. This is not something to dive into without some thought. Depending on the laws of your state, you may be required to hire an attorney. You will have to pay him up front and on a continuing basis while the case makes its way through court. If you do not know where to find the former owner, you may not be able to serve him with process and the case will die for lack of service. If you can find him and you do get a judgment, there is no guarantee that the former owner can or will pay any of it. But the one thing that is guaranteed is that your attorney will demand payment for his services. It is for this reason that Tim advised "Since [collection] usually costs more than is actually collected, most associations tend to write off the debt."

Unless you know where to find the former owner and you know he has a pile of cash under his mattress, you might have to just write this one off.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Apply what you learned from this situation and apply it to the next...Too late now but not in the future.

Former HOA President

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