Abandoned townhouse - any ideas?

Started by SheliaH • 7 replies • 1346 views

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SheliaH (Indiana)
Posts: 6,964

Posted:

We have a townhouse that's in horrible, horrible shape and vacant. The owner moved out several years ago and is a first class deadbeat. He's also unemployed, living with his mother (he's her caregiver) and two kids - at least this is what the judge was told when we sued him, so it doesn't look like we'll be getting anything from him.

Given the bank's failure to foreclose on the guy, I spoke with our association attorney about perhaps taking legal action against THEM, but have recently learned they dismossed their foreclosure action - it appears they're also walking away from the unit.

In the meantime, this place sits, boarded up, meaning we can't reside the building - I'm sure that makes one of his adjoining neighbors really happy since she's put her house up for sale (who would want to live next door to this???).

If and when this place ever sells, the lucky (?) owner will likely have to gut the inside and start over (at one point it had a squatter who used some of the rooms as a toilet because the water's been shut off). Sometimes I wonder if we shouldn't call in an architect to look at the place so it could be turn down and a small parking lot built in its place, but I'm sure this would look really weird and drive down property values even more.

I was wondering if a non-profit housing organization might be interested in buying it dirt cheap and doing the renovations so a homeowner could move in, or perhaps a vocational school might buy it and renovate it, giving the students valuable skills training.

Anyone ever had a situation like this? If so, what happened to the house (or condo or townhouse)? Thanks in advance for any help!

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Shelia

Might the local government declare it a safety/health violation thus forcing someone to repair it?

MelissaP1 (Alabama)
Posts: 13,836

Posted:

This question happens here all the time. No one really likes the answer. The HOA can really do nothing about the property. They do not own it. So that means it can't touch it. It's now up to the bank, owner, or HUD what happens to it.

Now I see bigger problems here than this unit. The fact you sued this owner or are wanting to sue the bank is a bit worrisome. Lawsuits are probably the worst option to pursue for an HOA. That is the wrong process. Your HOA can lien or foreclose for unpaid dues. This was the approach your HOA should have taken. If the owner had not paid their dues, then there should have been a lien place on it after 6 months of unpaid dues. If they still did not pay and it is not at risk of bank foreclosure, the HOA may consider that process. However, foreclosure is a stop the bleeding measure and the HOA most likely won't see any money from that. Just getting rid of the owner and a chance a new owner who pays their dues moves in.

I don't see how the bank did not foreclose on this house. If the owner isn't paying their mortgage then they should. Walking away does not obsvolve anyone from paying their debts. A foreclosure can take some time even years now. If they did not pay taxes then HUD may foreclose.

Either way, your HOA should have had a lien on the property and NOT a lawsuit. The HOA can't do anything except if you are to provide lawncare. The HOA still has to mow the yard if that is what the HOA is responsible for. I worry about your lawyer bill as well. That is another subject.

Former HOA President

JohnC46 (South Carolina)
Posts: 14,265

Posted:

I believe a case (via Covenants/Bylaws) could be made for the HOA to clean the place up and make it presentable. Now if the association wants to spend the money to do so, that is another case.

JuneS1 (Virginia)
Posts: 12

Posted:

We have an abandoned property that has been 'pending foreclosure' for nearly two years. It's a Catch 22. The Banks are not calling the notes because they can't afford to have that much 'bad paper' on their books so they are spreading the foreclosures out over several years. We were told that the bank may begin legal proceedings in three years.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Likely not the best solution but still an option:

If the bank isn't foreclosing, the Association can still foreclose.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

No one can buy it until the bank decides it wants to write off the bad debt and put it up for sale. This may be 3 years from now. Your HOA should just foreclose on it, then do whatever you want with it, I know MelissaP1 won't agree with me. You could have ownership in as little as 2 months. Rent it, have students work on it, etc. Just remember, the bank will foreclose on the HOA someday and take it back.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

It is not a disagreement Steve. It's just reality of one's HOA budget. It would be perfectly okay with me if a HOA did foreclose on delinquent dues after a year or more. (The OP did not mention dues being behind). If they want to own the home and use it as a clubhouse or rental property then buy it at the foreclosure. No problem there as well.

However, most HOA's could not afford to support owning a foreclosed home and the cost of maintaining it. Not only do they have to pay for the thousands of dollars to foreclose, they have to pay the same few thousand dollars to buy the house at the foreclosure auction. It took us about 2K in legal costs to foreclose. The opening bid on the house went to us. It started out at the 2500 they owed us. So we would have to spend 4,501 altogether. That is just to get the house. The owner had a second mortgage on it and we would have had to pay that off as well. Meaning we would have had to get a loan of 75K and make payments each month. That on top of the fact the home had 10 - 20 K worth of damage to be repaired to make it liveable. Considering we had a strict budget of 5k a month to meet and we only collected 5,200 respectively. It was not an affordable option. This is just an example of what it would be like for most cash strapped HOA's if they did this process.

Remember the money is not "HOA's" it is ALL the member's money. So if your HOA has a big enough budget and can absorb the cost of maintaining, repairing, paying the dues, loan and tax payments, utility costs, cost of rental, and reality fees if you decide to sell, then take it under an option. Makes sure the majority of the other members are behind this. It is their money going to pay for this.

I found the best option for the HOA but some posters consider it "crooked", is for the HOA to foreclose and find a buyer for the property. It could be a board member, a general member, a friend of a members, or even in our case the lawyer was interested. It is a PUBLIC AUCTION that is announce on the courtroom steps and in the newspaper. Plus word of mouth can play a factor when the house goes up for auction. If the HOA forecloses and has a buyer waiting in the wings, is the best overall option. They get the house sold off and their debt paid off. There is no extra expenses and they gain a person who is going to pay the dues regularly on the property most likely. So I have no issue if a HOA forecloses and a board member picks up the property. I know they will have to bear the expense and pay us. It won't be the HOA burden as much.

Former HOA President

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