Foreclosing on Heir

Started by CatherineS3 • 5 replies • 1373 views

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CatherineS3 (North Carolina)
Posts: 31

Posted:

The bank was stalling on foreclosure so our HOA took action and was granted foreclosure however owner declared bankruptcy and process stopped. Six months later the owner died and his son has registered his name and address as owner with the county. Our claim is substantial $20K. Even if he is able to negotiate the outstanding debt with the bank can our HOA still foreclose if he doesn't satisfy our lien?

JohnB26 (South Carolina)
Posts: 1,569

Posted:

what does your corporate attorney say ?

LarryB13 (Arizona)
Posts: 4,099

Posted:

If the original owner declared bankruptcy and the court granted relief, then I do not think you can go after the heir for that amount. Any amounts that became due and unpaid after bankruptcy was filed are fair game and the heir now owes them.

SheliaH (Indiana)
Posts: 6,964

Posted:

First, you need to find out what happened to the bankruptcy – your collection efforts had to stop when it was filed, but did the court discharge the debt (or some of it?) If so, you’ll have to write off that money, but unpaid assessments that accumulated after the filing date are still game, or should be.

Which leads me to the lien – how was the son able to list himself as owner? If ownership was transferred to him, I would think the lien would have to be addressed before the property changed hands or at the very least he’d become responsible if he became a co-owner.

Did the deceased owner have a will? If so and that went through probate, there should have been a public announcement (usually in the legal notices section of your newspaper) where creditors have a certain amount of time to file a claim against the estate. The house would have been part of the estate and once again, the lien would have to be addressed before it could be sold or transferred.

Bottom line, this sounds like a really big mess – turn this over to your attorney to sort it out. Brace yourself for a write-off (hopefully the lien will enable you to get SOME of your money). You should also work with the attorney to come up with some basic strategies when homeowners die or declare bankruptcy (there will probably be some differences depending on whether it’s a chapter 7 or 13). Good luck!

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

BruceC4 (North Carolina)
Posts: 1

Posted:

Some added details:
The HOA had a lien and was a listed a secured creditor. The bankruptcy was dismissed because the filer did not make the required payments.
After the death (in Feb 2103), our attorney suggested we just wait until the bank forecloses and sells the property. There was no probate at the time of death. Our attorney said that the bank may have to open an estate for him to have an administrator appointed for his estate even if there isn't one. We assume that is how the son got the property. The son is not listed in the reg of deeds yet, but the county tax records show him as the owner. We thought some members may have been through this before.

MissyP (Alabama)
Posts: 63

Posted:

I would drop the foreclosure proceedings. The bank always gets paid first and foremost. If the HOA does the foreclosure before the bank, it's basically doing the work of the bank. Foreclosures ONLY STOP THE BLEEDING it never makes a profit for a HOA.

It's best to notify the new owner the dues owed from date of possession. That way you can start collecting or pursuing lien options from that point on. Write off the previous loss. Plus put in a solid lien policy on when you place a lien or foreclosure. We do it at 6 months we lien. After a year, we would consider foreclosure. That would weed out those with financial issues, protestors, and those investors who play ignorance. Plus the bank most likely takes a year to start foreclosure, giving the HOA a chance to head off the bank instead of following it.

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