Disposition of Vacant Condo Units

AlexM1 (Oklahoma)
Posts: 287

Posted:

What can an HOA do when a unit was walked away from by a previous owner (due to financial difficulties) and taken over by a bank but left vacant and with no "real" owner for 2 or even 3 years? The unit could be in the name of the bank but the bank will not put it on the market. One of the units in question was taken over by the bank but still in the name of the previous owner even after 3 years. In the meantime, the HOA is paying for the upkeep of the common area around the condo....keeping the bushes trimmed, putting on a new roof of the building in which the condo unit is located, painting of the building in which the condo unit is located and is getting NO assessment from the unit. It is possible that the bank is waiting until the price of the unit goes back up and then put it on the market.... and if so, it is all at the expense of the HOA

TimB4 (Tennessee)
Posts: 21,059

Posted:

When you say that it was taken over by the bank but still in the name of the owner, do you mean that the Bank never actually foreclosed?

County records that are available online may not be current. You should check with the county tax office.

If the Bank owns it and hasn't been paying assessments, then place a lien on the property. If the Association forecloses the lien on the Bank, the bank will lose the property.

If the owner simply walked away and the Bank is holding off foreclosing, the Association can always foreclose on the property which may force the banks hand or allow the Association to possibly rent the unit until the bank forecloses on it's lien.

Another option is to gather the information and take the issue to the courts to force the Bank to take possession so assessments can be collected from them.

If you're not concerned about the payment of assessments and simply concerned that the property is vacant, you may be out of luck unless you want to try adverse possession as was once done in TX, Stranger moves into foreclosed home, citing little-known Texas law (of course the laws in your State may not allow this option).

AlexM1 (Oklahoma)
Posts: 287

Posted:

Tim:
Sounds good.... what if the bank (on one) just held off. This means that the former owner did foreclose but still in the owner's name even though the bank took it over... changed the locks, etc. ?

TimB4 (Tennessee)
Posts: 21,059

Posted:

If the bank took it over, the bank is the owner. The only way to know for sure is to check the county Tax records. If you know that the bank changed the locks, make sure the tax people know as well so they can have the bank pay property taxes. Additionally, knowing that the bank changed the locks can be evidence in court to force the bank to pay assessments from the time the locks were changed (you will likely need the work order from the lock smith for that).

TimB4 (Tennessee)
Posts: 21,059

Posted:

What I should probably add is that there can be a lot of legalities with determining ownership. Therefore, if ownership is in question, you may need to check with an attorney who may have better resources than you or your Association does to determine who the owner is.

RwT (Florida)
Posts: 154

Posted:

It might be cheaper to simply do a Title search.

RwT*

* Non-Lawyer spokesperson.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Keep in mind the HOA does NOT own this property. So no you can NOT change the locks or even enter the property. It is frustrating I know. We foreclosed on a property not the bank in our HOA. The property eventually became a HUD property when no taxes was paid.

We still had to mow the yard around the home to keep it with fitting in with the HOA. Don't need to bring attention to it. We did enter the place once because a pipe had broken and the ceiling fell in. The water had to be shut off from the street. Otherwise, the property was hands off.

I would still put a lien on the property for the money owed since the last payment received. Check the tax records is a good place to start. Just realize that you will probably never collect a dime off this property or the money back. Take it as a lesson learned. Make a better policy on when you lien. We do it at 6 months behind dues. The new owner will not be on the hook for paying the back dues once it is sold. Unless your in Florida they have a law that could happen. Otherwise you can just hope for new owners to move in, fix it up, and start a new payments.

Former HOA President

SheliaH (Indiana)
Posts: 6,964

Posted:

Quote:

Posted By AlexM1 on 04/26/2014 6:21 AM
What can an HOA do when a unit was walked away from by a previous owner (due to financial difficulties) and taken over by a bank but left vacant and with no "real" owner for 2 or even 3 years? The unit could be in the name of the bank but the bank will not put it on the market. One of the units in question was taken over by the bank but still in the name of the previous owner even after 3 years. In the meantime, the HOA is paying for the upkeep of the common area around the condo....keeping the bushes trimmed, putting on a new roof of the building in which the condo unit is located, painting of the building in which the condo unit is located and is getting NO assessment from the unit. It is possible that the bank is waiting until the price of the unit goes back up and then put it on the market.... and if so, it is all at the expense of the HOA

Welcome to my world! This was one (of many) issues that I wrestled with as my board's former treasurer.

Our new president once told me a bank representative told him many banks (at lease in our area) are concentrating on foreclosed homes in areas where they haven't really lost value or very little and after they dispose of those homes, they'll move down to the ones where the value is considerably less than the mortgage. If you have a lien on the house, as Melissa suggested, the association will get money owed from the date the bank took over, but the association will probably have to eat what accumulated up to that point.

I also heard this is also why the banks keep the house in the former owner's name - technically, he/she is still responsible as long as that's the case. When the house is finally sold, they do the necessary paperwork and pay off the association's lien. You could go after the bank, but that can get expensive and very time-consuming. You could also go after the former owner, but as you note, he/she walked away from HOA assessments and the mortgage because of financial difficulties, so assuming you can find him/her, it may be a waste of time if there are no resources.

Meanwhile, everyone has to pay more in assessments to make up for the lost income - and the outside still has to be maintained because if you don't do that, it can hurt the property values of the adjoining units. It's a vicious cycle and unless more states (like mine) enact laws that provide more help for the HOAs this will continue.

In the meantime, get a lien filed as quickly as you can. Some HOAs do it after the balance hits a certain number or number of months of delinquency. You should also consult with your attorney to see what's the best way to protect the Association's interests. For example if the mortgage company is foreclosing, it might be futile to file a lien because the mortgage company's interests supersede the HOA lien (when the house sells, there's not enough to pay off everyone and the bank has a secured interest) And yet, if a lien isn't filed the Association might not get ANY money back - again, consult with an attorney before you decide what to do. Good luck!

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

JonD1
Posts: 2,350

Posted:

Quote:

Posted By SheliaH on 04/28/2014 9:49 AM

Posted By AlexM1 on 04/26/2014 6:21 AM
What can an HOA do when a unit was walked away from by a previous owner (due to financial difficulties) and taken over by a bank but left vacant and with no "real" owner for 2 or even 3 years? The unit could be in the name of the bank but the bank will not put it on the market. One of the units in question was taken over by the bank but still in the name of the previous owner even after 3 years. In the meantime, the HOA is paying for the upkeep of the common area around the condo....keeping the bushes trimmed, putting on a new roof of the building in which the condo unit is located, painting of the building in which the condo unit is located and is getting NO assessment from the unit. It is possible that the bank is waiting until the price of the unit goes back up and then put it on the market.... and if so, it is all at the expense of the HOA

Welcome to my world! This was one (of many) issues that I wrestled with as my board's former treasurer.

Our new president once told me a bank representative told him many banks (at lease in our area) are concentrating on foreclosed homes in areas where they haven't really lost value or very little and after they dispose of those homes, they'll move down to the ones where the value is considerably less than the mortgage. If you have a lien on the house, as Melissa suggested, the association will get money owed from the date the bank took over, but the association will probably have to eat what accumulated up to that point.

I also heard this is also why the banks keep the house in the former owner's name - technically, he/she is still responsible as long as that's the case. When the house is finally sold, they do the necessary paperwork and pay off the association's lien. You could go after the bank, but that can get expensive and very time-consuming. You could also go after the former owner, but as you note, he/she walked away from HOA assessments and the mortgage because of financial difficulties, so assuming you can find him/her, it may be a waste of time if there are no resources.

Meanwhile, everyone has to pay more in assessments to make up for the lost income - and the outside still has to be maintained because if you don't do that, it can hurt the property values of the adjoining units. It's a vicious cycle and unless more states (like mine) enact laws that provide more help for the HOAs this will continue.

In the meantime, get a lien filed as quickly as you can. Some HOAs do it after the balance hits a certain number or number of months of delinquency. You should also consult with your attorney to see what's the best way to protect the Association's interests. For example if the mortgage company is foreclosing, it might be futile to file a lien because the mortgage company's interests supersede the HOA lien (when the house sells, there's not enough to pay off everyone and the bank has a secured interest) And yet, if a lien isn't filed the Association might not get ANY money back - again, consult with an attorney before you decide what to do. Good luck!

Sounds like the situation we have with one unit here. The last owner is long gone but the unit is still in their name. More than likely we will never collect on the lien we have on him for unpaid CCs. Now the bank refuses to complete the foreclosure process leaving the unit in some state of LIMBO ownership.

Can't go after the bank because technically they do not own the unit. I went so far as to have an interested buyer contact the bank to buy the unit as is they did not even want to hear his offer.

So the unit sits empty not paying CCs and there is little that can be done to change that.

Banks, you've got to love them.......

SheliaH (Indiana)
Posts: 6,964

Posted:

At the time I left the Board, we had THREE homes like this!

In another case, the owner had died suddenly and didn't have a will. His niece was trying to clean up his affairs and had found a buyer for the home - the buyer was willing to take over the mortgage (the owner had been current with fees at the time of his death and the Association would have only had to write off a month or two), but the bank wouldn't cooperate. About 18 months later, the bank foreclosed anyway and as of today, it still hasn't gotten rid of the unit (but they've kept it in the owner's name - go figure).

As for the others, no one's paying anything (including taxes) so they may end up being sold off via a tax lien and then everyone will be out of money (which has happened to two homes). Or they'll go to an investor who will rent the place out, thus causing another set of problems - starting with current owners having trouble selling their homes because the owner-occupant/renter ratio is out of whack and mortgage companies might not approve a loan for a potential owner-occupant.

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

JonD1
Posts: 2,350

Posted:

Quote:

Posted By SheliaH on 04/29/2014 6:35 AM
At the time I left the Board, we had THREE homes like this!

In another case, the owner had died suddenly and didn't have a will. His niece was trying to clean up his affairs and had found a buyer for the home - the buyer was willing to take over the mortgage (the owner had been current with fees at the time of his death and the Association would have only had to write off a month or two), but the bank wouldn't cooperate. About 18 months later, the bank foreclosed anyway and as of today, it still hasn't gotten rid of the unit (but they've kept it in the owner's name - go figure).

As for the others, no one's paying anything (including taxes) so they may end up being sold off via a tax lien and then everyone will be out of money (which has happened to two homes). Or they'll go to an investor who will rent the place out, thus causing another set of problems - starting with current owners having trouble selling their homes because the owner-occupant/renter ratio is out of whack and mortgage companies might not approve a loan for a potential owner-occupant.

Actually when push comes to shove and the taxes are not paid the bank has stepped in and paid them on a unit not current with their CCs because the county will take over the property and the bank is out 100%.

Sad that they are allowed to get away with this but to go after them foot the legal bill and get nothing is IMO a Fool's Mission