Short sale vs. Foreclosure.

Started by FionaC1 • 13 replies • 1387 views

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FionaC1 (Washington)
Posts: 93

Posted:

We have a unit in our building who has been behind in due for to the point it's in the double digits, high teens. The unit has been hiimmm and haaaing regard foreclosure/ shortsale for a couple of YEARS! There is a lein on property, California law prohibits foreclosure. Our hired atty has done little to no good from what I can see. ( Newly on the board after a 3 year hiatus.. was behind then.. )

My question is this. We had a realtor ask for financials ( dues owed) as they have a new owner to be who is in the middle of escrow, this WILL work out to our advantage.

I am asking why is the original owner still here?? If escrow is closeing in a few weeks shouldn't this guy be outta here? What happens if it sells and he still is here? I suspect this man may turn into a squatter given his lack of urgency to leave his home..

GlenL (Ohio)
Posts: 5,491

Posted:

Fiona I don't know who told you you couldn't foreclose in CA but they were only half right. You can't foreclose over unpaid fines but you can over unpaid assessments once the debt reaches $1,800.00 or has been unpaid for over a year. Plus if you do a judicial foreclosure (more expensive & time consuming) you can add in the fines to the amount owed.

Studies show that 5 out of 4 people have problems with fractions

MelissaP1 (Alabama)
Posts: 13,836

Posted:

So the person is selling the home and is in escrow? You may now have lost the ability to foreclose to make it worth it. I'd say let the sale go through at the point. Chalk this up to lesson learned. I'd just make sure the lien is in place on the home. Keep in mind the NEW owner (except in Florida) most likely does NOT have to pay the past dues nor that lien. That is still on the former owner. The NEW owner will be responsible for the dues from now on after the purchase.

As far for the guy staying... That is the new owner's business NOT the HOA's. The HOA may contact the new owner and let them know there is a person in the home. However, the HOA can do nothing about it as far as evicting. It is the owner's property.

When I bought my new house, I had to pay rent for about a week on it. My other house closed a few days before my new was ready to close. The owner let me move my stuff in a few days early. I just had to pay the rent when we closed. So it is possible for the new owner to allow the former owner to live there with arrangements. It is still NOT the HOA's business as long as the dues are paid.

Former HOA President

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Fiona

The HOA is getting rid of a deadbeat and hopefully the nw owner will pay their dues on time. The association should be making nice so that this deal happens. Do not get the HOA in the middle of it.

JonD1
Posts: 2,350

Posted:

Maybe the new owner intends to rent his property to the former owner???

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Tons of variables. Who is the owner? If its foreclosed, the bank if the owner. If it's a short sale, the guy living in it is the owner and might leave the day of closing. There are way too many variables as to why the guy is still living there. Make sure your most current lien was filed yesterday. Do it now. If the new buyer needs a mortgage, this lien will need to be paid off. If the buyer pays cash, he can buy it without paying the lien, but he won't get title insurance.

You could always go a different route and sue the old owner for the back dues, get judgement, etc.

There are a thousand different directions this could go in.

CarolR11 (Colorado)
Posts: 2,563

Posted:

Fiona, is this person the director about whom you've complained previously?

Anyway, look at davis-stirling.com, which I think you've said you're familiar.

No on here can answer why the current owner is still there. He owns it, right? Escrow hasn't closed, right?

You sure can still go after him for unpaid assessments once escrow is closed and he's long gone. That's when you need your attorney or collections attorney to step in.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

I am not nor do I play a lawyer.

To make it brief. If a lien(s) is not settled (paid off) when a home is sold (like in not enough money to pay all liens), the lien(s) is removed so there can be a clean title. This means the home can then be sold with a clean title. There is hierarchy of liens to be paid, but another subject.

Now this does not mean the debtor (the one who owes) is free of the lien debt. The debtor can still be persued by whatever legal means including liens on what he owns.

A typical HOA example. The HOA is owed $1,000.00 in back dues so they hire a collection attorney to go after the $1,000.00. The attorney says fine, there will be a $750.00 charge so we can "start" by going after $1,750.00 and yes legal fees can be added. OK, go. The attorney says great as soon as you pay me my $750.00. You ask what if you do not collect anything? The attorney says that happens sometimes. You ask could the charges be more then $750.00? The attorney says they could be but I will not know until we get into it. Now let us say it happens in this case. The HOA is out the $1,000.00 in dues and the $750.00 legal fees so the HOA lost at least $1,750.00 to collect $1,000.00.

The above example begs the question of when it is time to maybe consider kissing the back dues bye bye?

CarolR11 (Colorado)
Posts: 2,563

Posted:

In Fiona's HOA, John46, it looks like the delinquent owes "in the high teens"; so $17-18,000? I don't know if $750 by a collection attorney to start trying to collect is "typical" or not, but ours charges $250. Our board approves anything additional, e.g., a mini asset search. (Luckily our delinq. rate is very low right now).

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I think those are just rough example numbers Carol John is using. It cost us $850 in legal bills to do the foreclosure. However, one has to consider the lawyers "Retainer fee". Which can start out at $1500 and that is NOT part of the legal fees one can collect back. It is usually the hourly, contact, and filing fees that can be collected back. So there are some hidden costs involved that are not collected.

It's just too expensive to pursue. Plus considering that you may just get a "judgement". That does not mean money. It can take years to collect if the HOA remembers in years from now there is one outstanding...

Former HOA President

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

However, one has to consider the lawyers "Retainer fee". Which can start out at $1500 and that is NOT part of the legal fees one can collect back. It is usually the hourly, contact, and filing fees that can be collected back. So there are some hidden costs involved that are not collected.

Another lawyer pulling a fast one on you. I did a foreclosure for $800 in legal fees and the court awarded it all back. I refused to pay a retainer and the lawyer said fine. All depends on your negotiation skills. You got scammed.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

If the HOA already has a lawyer on retainer to be their lawyer, then one may assume this is a hidden cost on all legal interactions. I did not pay a retainer for this lawyer who did the foreclosure. However, I believe that was because he was our accounting firm's lawyer and represented them. We just kind of "borrowed" him from time to time. It allowed us to skip the INITIAL retainer fee. It's not to say another HOA when setting up to keep a lawyer at beck and call won't encounter this cost.

Former HOA President

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By SteveM9 on 05/19/2013 12:27 PM

Not my lawyer. He prefers to stick it to you slow....not fast.....LOL

CarolR11 (Colorado)
Posts: 2,563

Posted:

Our Board interviewed four HOA law firms last week and all and I have a schedule for collecting delinq. assessments; reviewing payment agreements ($150), for liens, for foreclosures, court actions, etc. None are "hidden" fees.

Depending on how much work they would have to do, the fees would total as low as $400 on up to close to $2,000, which would include preparation of superior court complaint. So it really does depend . . .

It's well worth paying them to go after delinquent assessments that are into five figures as Fiona's case is.

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