Association Fees caught up in short sale?

Is your budget/dues situation so tight that one delinquent unit is a make-or-break situation for maintenance? I think you need to re-assess your financial situation overall.

Sorry about your situation though, and I have no specific advice. We currently have 2 of 20 units that are delinquent, with one of the units supposedly in the early foreclosure stage. No clue how that'll turn out.

Posted By DaveD3

Is your budget/dues situation so tight that one delinquent unit is a make-or-break situation for maintenance? I think you need to re-assess your financial situation overall.

Heed this advice.

Also the chance of your HOA seeing any money as the result of a short sale or foreclosure is next to nothing. Do not plan on that money.

Typically an association in good financial situation should be able to handle 5-10% of their dues as not being collectable.

Do file a lien on the unit as soon as possible. It might not pay off but without it, it will not pay off.

Hope this helps

Joyce

Owners should always be told/updated with financial statements including past due amounts. There has been a running discussion on this chat about how much owners are told about back dues. The discussion comes in the form of how much identification of who owes is given.

Some say no identification just things like:

Owner A, $2k 90 days overdue, lien filed.

Others like myself say name names like:

John Jones, Unit #234, $2k 90 days overdue, lien filed.

Some try to be nicer and fall in between......LOL

We've had this happen at least four times in our community - the liens were filed before the homeowners died, but at least two were washed out when the mortgage company got around to filing foreclosures and I'm not optimistic for the remainders. We'll get a bit of money from the date they took over when the houses are eventually sold, but as you can see there are some instances where you will have to write off the debt and move on. Unless and until the state legislature gets around to passing some sort of superlien legislation that will help HOAs like yours and mine, "sucking it up" will continue to be the rule, rather than the exception.

As to what the homeowners should be told, I suspect they may already have a good idea of what's going on, especially if you have a small community where everyone knows everyone else. We never use names or addresses when discussing delinquencies - the minutes may reference account numbers, which mean nothing if you don't have the owner roster (and if you did, that information would be redacted). As others have said, you can let everyone know you have a delinquent account and steps are being taken to collect - and until it's resolved, there may be a limit to what work can be done.

The disabled son (and the irresponsible siblings, unfortunately) isn't responsible for the debt, but has your association attorney spoken to him - maybe he'd be willing to pay something until the house is sold. If the mother died recently, have your attorney check if an estate has been opened up and get a claim filed posthaste. That may be a lengthy process depending on what the couple owned, but it's a start, in addition to getting a lien filed.

It appears your board didn't contact the family when the debt began piling up - I know it's tough to do, especially when you know there's been an illness or other major financial crisis, but as Board members you have a responsibility to everyone else in the association. That's why this is a good time to reemphasize to everyone else that it's their responsibility to come to the board when facing financial difficulty so a payment plan can be arranged. You may also want to talk to your attorney about tweaking your collection policies so this

Short sales and foreclosures are entirely different.

In most states the lender's lien is superior to the association's so there is no obligation for the bank to pay the HOA liens in a foreclosure action.

A short sale is not a foreclosure; it is an agreement whereby the bank agrees to accept less than what is owed on the existing mortgage. In all other aspects, it is treated just like any other sale. Your association should record any liens that it has to ensure that you get paid when the deal settles.

BTW, in many parts of the country homes sales are on the rise as are home values. This gives the banks less incentive to enter into a short sale agreement. If the son is making his mortgage payments on time then the bank has no reason to foreclose and even less incentive to accept a short sale.

Since your board has stumbled into uncharted waters, you would be wise to seek the advice of an attorney before acting on your own conclusions.

Yes, I do. I base this on our HOA's experiences - as treasurer, our community has had a number of cases where the mortgage company forecloses on the house and sells it for whatever they can get and there's never enough to pay off the unpaid assessments and we end up writing off hundreds of dollars. We go after the homeowner, but most of the time, they don't have anything or they're judgment proof (only income Social Security or something you can't garnish).

Unfortunately, Indiana law doesn't have much for HOAs other than filing liens and foreclosing, which most of the time just gets the homeowner out of the house and then you have to get the mortgage company to take a deed in lieu of foreclosure (which they almost never do) or go after them for a quit claim so the HOA can sell it and recoup some of the money (meaning more legal expenses). If we had a super lien law where we could at least get a year's worth of unpaid assessments, that would help our bottom line.

Shelia

While an HOA member, I can selfishly agree to make our lien the super/important/best/first paid, etc. That said then what about the poor plumber (mechanics lien) who the owner stiffed and who filed the lien before the HOA did or the others they are stiffing?

I believe the law basically says first come, first served so get in line. This I personally consider more fair.

Maybe the philosophical difference between us what is fair versus what I want. I admit what I want is not always the fairest solution.....LOL