Mortgage company won't pay liens on foreclosed property. What to do now?

Hi, all! I appreciate any help or advice you can provide to us.

We have a property owner, one who is sort of crazy, which is why no one has confronted him, who has not paid his HOA assessments for more than 3 years. The amount due to the HOA is more than $3,000 at this point.

We put a lien on the property in 2009. Unfortunately, and unbenownst to us, the property owners had been provided a second mortgage prior to that date.

The home was recently sold on the courthouse steps. Since the second mortgage pre-dated the lien, the mortgage company said that we are out of luck when it comes to collecting because the lien does not transfer during a foreclosure.

Our attorney agrees with this.

What I want to know is this: is there anything we can do as far as drafting and passing a new covenant that would permit the lien to be transferred at the time of sale whether or not the property has been foreclosed upon?

We have never, until recently, had a problem collecting liens. But since the economic downturn, and the recent spate of foreclosures, we have now lost close to $5,000 from liens that were unable to be recovered.

Any help or advice would be much appreciated.

Okay, but can we transfer the debt in some other manner to the owner upon whose property the lien originally was placed?

We have heard there is such a thing as a 'personal lien,' although I never had heard of any such thing previously.

Have any of you ever garnished the wages of someone who did not pay HOA assessments?

Just wondering what, if any, other recourse is available to us.

Thank you, and I'm sorry if these are stupid question. I am just at my wit's end after seeing our HOA absorb these financial losses.

This is a question best answered by your attorney.

I feel your pain. As Larry said, this is happening everywhere. At this point, the best you can do is learn from this and move on.

First, you can see a lien doesn't necessarily guarantee quick payment, but you need to file it as soon as you can. If you have a property manager, you can have him or her do a title search to see if there are any other lieans on the property, so you'll know in advance whether you're throwing good money after bad.

You didn't say if you went after the owner personally - sometimes that works if you try it first. But, that's no guarantee of payment either. Anyone can sue - the question is can you collect?

This would be a good time to talk to your attorney about your collection policies to see if anything needs to be added or tweaked. When you come up with a revised policy, be sure to notify your homeowners in writing. We send ours every year with the upcoming year's budget - that's sent 30 days before the new years, so everyone kows what's up (not that it stops some people...)

More than likely, no.

I believe in most states liens are paid in the same order they are filed, the oldest being paid first. Also, generally state laws dictate how liens are to be paid. So, the short answer is even if you could put something in your covenants, if it conflicts with state law, it couldn't be enforced anyway.

State laws regarding liens also sometimes state that certain liens have precedence over other liens, even if the lien is filed later. For example, federal and tax liens often have priority even if filed later.

The only thing you can do is follow the advice of your lawyer. I would think that if there was a way for you to get the money owed to you, or to prevent something like this from happening in the future, your lawyer would have already suggested it.

Don't get your hopes up. Wikipedia won't provide any guidance on what types of liens are valid in your state or what the priorities are. Try researching your state government's or your legislature's website. As I posted earlier, state laws usually govern how liens are applied.

Don't proceed on your own. Consult a lawyer.

Also, as I said before, if there was something that could be done to prevent this sort of thing from happening again, I'm fairly certain your lawyer would have already suggested it to you.

Possessory liens usually require some sort of contract, such as to repair a vehicle or to store the trailer. I am not certain whether you have such a contract. It sounds like your association has some sort of common area used for parking RV's or other vehicles. A possessory lien means that you can hold personal property that the debtor has placed in your possession and keep it until he pays up. Depending on the type of property, you may be able to sell it without any sort of formal proceedings. If you give personal property back to a debtor without obtaining payment, you normally cannot go seize the property. Once it is gone, it is gone.

If the owner in question is no longer a member of your association due to being foreclosed upon by the bank, you might see if you can acquire title to the trailer and its contents as an abandoned vehicle. If you get title, you can sell it all and recoup some of the money you lost. In the meantime, since he owes your association money and is no longer a member I would lock that trailer very securely in place and let him nowhere near it. If he wants it back he either pays up what he owes or gets a court order to force you to hand it over. If he comes onto the property have him arrested like any other trespasser as he no longer has a legal right to be there.

Although Larry does make some good points (and I kind of agree with him) it needs to be noted that the trailer is not yours or (if the bank has title) a member of your associations. It may or may not be possible that a member of the Association (neighbor of the individual) is considering him a guest.

The Association must comply with your governing documents and local/State laws.
It's likely the only legal thing you could do with the trailer is go through the process to have it towed.

Some possible issues with following Larry's advice:
Moving the trailer without permission of the owner (unless towed in compliance with local towing laws) would be theft
If the trailer is locked and you break the lock and enter the trailer that would be breaking and entering.
If you remove items that are not yours from the trailer that is not yours, that would be burglary.

You should first talk with an attorney to see if you have a "claim of right" to the trailer and property inside it.

Having the trailer towed would be a bad idea. It gets it off your property and into the hands of a towing company, who will reap a small profit if the owner bails it out of storage or a large profit if the owner does not claim it and they sell it as an abandoned vehicle. In either of these cases, you will get exactly zero.

The bottom line is that a person who owes you money has unlawfully parked his personal property on your real estate. Because your common area is available for use only by those who have paid for the privilege, this guy is also stealing services. He could park his trailer elsewhere but he knows that he would have to pay to do so.

Because of the previous debt, the current trespass, and theft of services, you have a lawful possessory lien on the personal property, should you choose to exercise it.

When I was in the self-storage business I cut dozens of locks and sold tons of personal property. I was never once charged with B&E or burglary. The law considers the property abandoned and permits me to dispose of it to recover my loss.

It is odd that you think it unlawful to seize the property in the trailer but that you would suggest that a towing company could lawfully remove the trailer and its contents.

Unfortunately, all this advice will go nowhere as I suspect that this is a spineless board of directors who operates only by indirect action. The former owner intimidated them into not collecting and now he is back thumbing his nose at them by parking his trailer on their property. They will wring their hands and whine about the $5000 they lost but take no action to recover it.