Association dues - Deed in Lieu of Foreclosure

In summary does a deed in lieu of foreclosure wipe out a previously filed lien?

Background:
We have a unit that had unpaid dues after the owner walked away from their property. The bank took the property back through a deed in lieu and has since begun paying the dues on the property from the time they took possession. Prior to the bank taking possession of the property we had filed a lien for unpaid dues.

Our MC has written off the debt from the previous owners saying we can't collect on it. Since the original property owners did not file bankruptcy and the lien wasn't cleared during the DIL process wouldn't it still be a valid lien on the property? My take is that the original owners still owe the association dues or that the bank will have to satisfy the lien when they try to sell the property. Am I anywhere close to correct in my line of thinking here?

The bank does NOT owe the past dues. They are new owners and start from the point they took over. As far as collecting from the other owner it may be very complicated and not worth the effort. You can't get blood from a turnip even if you find these people. they could not even pay the bank. Plus the lien probably got washed out in the bank foreclosure process. The bank gets paid FIRST no matter what. The HOA and other debtors would fall in line after that. If there was no profit in the sale/foreclosure, then no one gets any money.

I would concentrate on more preventative actions for the future. Make sure this does not happen again...

I am not familiar with Deed in Lieu of Forclosure, but my first guess would be that the process is more like a sale than a foreclosure. That is, the lender did not enforce its lien through court action.

If this property had gone through judicial foreclosure and somehow sold for more than what the bank was owed, the HOA would have been paid on its lien due to being in second place, and then any other liens would have been paid from the proceeds before the remainder went to the borrower. Because there was no foreclosure sale, the HOA lien should still be in place. The foreclosure would have either paid off liens from the proceeds of the sale or killed them off due to a lack of sufficient funds.

By "purchasing" the property, the bank took possession subject to all liens on the property.

How much money is involved? My first advice would be to leave the lien in place and wait for the bank to sell the property. The amount of the lien may not be worth them fighting it, so they will just pay it off the next time the property changes hands.

If you can locate the former owner and think he has the resources to pay, you might be able to file a civil lawsuit against him for the amount of the back assessments.

If this involves a lot of money you would be best off to consult an attorney to determine whether it is worthwhile to pursue this matter with either the bank or the former owner.