Question for those who have foreclosed on a lien

This year is the first year that I have had to actually file a lien for unpaid assessments.
In looking over the payment history, I firmly believe that we will need to foreclose on the lien or simply continue to eat the assessments.

My question, to those who have gone through this, is how long after filing the lien did you wait before initiating foreclosure procedures?

Check - including with competent professional help- the options allowed by your particular state. If you "foreclose" you acquire title, the right to possession and all the downside obligations of owner. Many /most? states legislate lienholders to attorn rents from tenants without triggering formal foreclosure. The lesser remedy of Power of Sale does not acquire title and - obeying notice requirements to registered mortgagee and encumbrancers, may persuade lower priority encumbrancers to pay and maybe accelerate the mortgage balance.

Got any buyers ready if you "foreclose" ? How well would your condo/HOA/strata/syndicat handle being a full owner ? Review with competent counsel.

Tim, we have never foreclosed on a lien. If an owner can not pay then we try to work out a payment schedule with them. If that can not be achieved a lien is filed with the timing depending on the amount owed and the time lapse involved. If that does not get the desired result we would have an attorney initiate foreclosure only to encourage the mortgage company to foreclose.

Tim

If I read what you have written, I would not foreclose, as you will have problems from the bank and your lien will be wiped out. The bank is only interested in the owner paying the mortgage, they could care less. Now, if the buyer took out a second and the HOA had a lien in place, the lien would have to be paid prior to the second being done as there must be clean title when a mortgage company is involved.

Tim,

My association exists mostly to maintain our roads. Assessments are based on acreage owned; my own annual charges are $128.50 for 39 acres.

A few years ago the owners of one parcel said that they were not getting their money's worth so they stopped paying. Our attorneys initiated a foreclosure action. The owners threatened a countersuit but ultimately filed no responses of any kind. The action was essentially uncontested and our association obtained a deed from the sheriff when no one bid at the auction.

The kicker is that this property has a home built on it and there was a mortgage on the home. Like most states, Arizona puts a mortgage lender first in line but it is up to the lender to join the fight. The lender was some small-time operator and apparently unaware of his rights and/or unaware of how to assert them. He filed no objection to our foreclosure action. At a later date he made a "demand" that we hand the property over to him but he filed no formal action in court. We kept the property.

So it is possible to foreclose even when a lender has a superior lien.

Never foreclosed against the house. But did foreclose against the owner's vehicle. Process took around 90 days.

Larry,

I think it was a judgement. not a foreclosure, and they were able to seize and sell the vehicle.

Tim - Our attorney's advice - It's not advisable to foreclose. IMO - I'd like to see Virginia go the same way as other "Super Lien" states. Banks typically can and will sit on a property for 2-3 years before going to foreclosure. We're fortunate that all of foreclosure properties have flipped over at this time. We were getting hammered with delinquencies for a while.
http://constructionlawva.com/will-my-hoa-foreclose-its-lien-on-my-house/
http://www.vahoalaw.com/covenant-enforcement-foreclosure.html

Does the association still "own" the foreclosed residential property ? If it's occupied by the debtors/former owners, is the association operating it in the red even before any eventual attempts to sell it ? Does the debtor have the right under your state's law to now compel the legal owner association to carry out habitability repairs ?

As Tim surmised, it was a judgment. HOA filed for judgment against HO. HO was a no show at the hearing. Judgment awarded to HOA. HOA attorney went after vehicle. Quick and cheap.

Thanks very much Larry. Things don't always work out that well.

Knowing your attorney, I'm sure that he's spot on in his advice. It's interesting and notable that a lot of times the HOA is the last to be paid and the Mortgage companies in some cases are getting paid. Usually, if they are not paying the HOA, then they are not paying the lender. If there if they owe more than what the property is worth, there is no point in foreclosing. The HOA is 2nd or 3rd in line after the feds, the state, First trust, 2nd trust etc.

Even in states that allow for "Super Liens" that just makes the HOA EQUAL to the BANK. Which depending on the situation is a better advantage than regular liens. However, still never foreclose on a house the bank is. That is why I wait a year before considering foreclosure. That is about the time the bank forecloses for non payment to avoid wasting time and money. Just leave the lien on at that point. A year is a good weeding point for finding out status on mortgage and why they are not paying dues.

A person protesting the HOA witholding dues I would consider proceding with foreclosure. That means they are probably good with mortgage and taxes. They can afford to stop the foreclosure once they realize the situation. A person not paying bills or an LLC ownership situation is when it goes into grayer areas... That then has other ramifications and decisions. A LLC can be very difficult to limit it to one owner. It is the one left holding the bag in the end. I tried that once and a LLC ownership situation really does need legal advice.

I still say foreclosure is a stop the bleeding situation. It is NOT a profit making one. Realize that not every situation needs to be foreclosed on. It may be better to leave a lien and check on its status. Lawsuits are not the best solution. It is a time issue and a waiting process. Panic or rash decisions can cost you...Slow and steady wins the race... Rabbit stew is good to eat at the winners table...

In my state, only a first mortgage stands ahead of an HOA lien. A second mortgage stands at the end of the line.

This is why I advise people to use caution if they wish to secure a loan with a second mortgage. If the borrower defaults on either mortgage or on his HOA assessments, the lender of the second mortgage needs to be in a position where he can pay off all the superior claims. Otherwise, the lender of the second mortgage is likely to lose everything.

This is a sign that he is buried deep in debt and sees no way out. You are not the only party he owes and you are not the only one making demand for payment.

Tim,
I think the danger of "jumping through hoops" is that you then need to determine where to draw the line.

I am not suggesting that you should never negotiate a payment plan with an owner. But in the example you have offered, you are now uncertain as to when/whether to draw the line and say "enough".

That is why I think it is important to have a collection process and to stick with the collection process. As an owner, I expect the Board to be fair to all owners, work within reason to collect on debt, and to follow a legal process. I have seen it go both ways. Some owners have made a good faith effort to get caught up when they are in arrears and a few other owners have dragged things out, negotiated a "deal", reneged on the "deal", made another "deal", and dragged things on until they short sale the home.

Your options seem to be to place a lien and allow the owners to continue living in their home without paying their fees or to take legal action. Your responsibility ultimately lies with all owners, including the ones who are paying their fees in full and on-time.

Larry,

I agree. This is why I'm looking at stopping the bleeding rather than actually collecting the monies owed (however, either one would work).

Tim - Here an news article for you. Note paragraph 3. Interesting...
http://www.reviewjournal.com/real-estate/all-banks-have-do-pay-their-hoa-fees-rest-us

"The banks will continue to make loans at competitive interest rates for homeowners. Nevada is not the only state where similar decisions or restrictions have been made by other state Supreme Court justices.

Again, here are the facts: First, the nine-month superlien law has always been on the books. All the banks have to do is to pay the homeowner associations. The banks are sent two notices, one of default and one of sale. Second, for all new bank loans and all refinanced loans, the banks have the authority under Nevada Revised Statutes 116 to create an impound account, similar to the ones that exist for the payment of the homeowner’s property taxes and insurance. When a homeowner pays his or her monthly mortgage payments, the association dues will be included. The banks would quickly know if the homeowner is delinquent in association payments, as well as mortgage payments.

Third, no title company will provide a clean title on any foreclosed homes that are owned by the associations or by the investors who purchased the homes during the associations’ auctions. The title companies are going to require quiet titles before insuring a home to be resold from the foreclosure deed. This will take time and money. To obtain quiet title will require the owner of the home to initiate action in District Court, at which time, you know the banks will fight the action, No bank is just going to lay down and let its loan be extinguished without a fight!

Many associations are informing their collection companies to notify the lenders again before taking any action.

The benefit to the associations and to the majority of the individual homeowners who pay their assessments each month is that the associations will not have to struggle so much in meeting their financial obligations. When the banks do not take action at the time of the nine-month period, i.e. paying the superlien, the associations are then forced to continue the foreclosure actions, which take more time, during which no funds are being received to pay for the associations’ obligations. Before the Supreme Court decision, many associations could not even finish the foreclosure process of publishing the sales of these delinquent homes because there was no guarantee that the homes would be purchased at the foreclosure auctions.

We are waiting to hear the Nevada Supreme Court’s decision as to whether late, legal and collection costs are included with the nine-month superlien payment. Hopefully, the courts will support the associations’ position that these costs are included in the superior lien, which will be a major benefit to the homeowners, whose dollars support their communities."

Question on: new Colorado HB 1276 collection policy signed on 5.28.13 and effective as of January 1,2014,

Good evening Roger,

Question for you: under the new Colorado HB 1276 collection policy signed on 5.28.13 and effective as of January 1,2014, who is responsible for correcting an illegal lien under the new HB- 1276, done by the PMC, not approved by the Board. I have contacted Attorney General John Suthers on this, with no response. This has also been forwarded to DORA. I have been working with Colorado Legal Service on this, as I'm again as stated strapped for money. I want to keep my home, however there is way to much cover-up going on issues as this, and the homeowners are the ones that are loosing their homes because of this!!

None of the collection Policy HB 1276 required under CCIOA, did not include the minimum items and the Board DID NOT sign the new collection policy until 1.14.2014 and then emailed to the HOA atty on 1.17.2014 for recording.

I have recently been in a major accident and have not started receiving my loss of wages, and my money is tight!

The HOA attorney is aware of this, and has done nothing!!

Thank you!

I found a solution with the HOA NOT owning the property at foreclosure time. Some people may find some "ethical" fault in it but there really isn't. Simply put the foreclosure process is a PUBLIC one. It's published in the local newspaper and the auction held on the courthouse square with the lawyer screaming it. The owner can always step up at this point and buy back the property by paying what is owed. Plus there is a right to redemption period up to a year in some states. Each state is different on the timeline or if they offer this time period.

With that stated, I find no reason why ANYONE in the HOA can NOT find a buyer or even be a buyer of this property. It can be a board member, a renter, or a friend of a friend. A foreclosure won't have a sign on it but word of mouth can pass around. Make this a great opportunity for a new buyer.

I know people will throw a fit and call the whole "Unethical" thing if a board member buys the property. However, in reality the board member is part of the PUBLIC. They may have some "inside knowledge" about the situation but they have to pay and bid the same way as anyone else purchasing. They still have to pay dues on it too. I don't see a problem but the people who did not attend meetings, participate in their HOA, or read a newspaper will...

Simply line someone up for the opportunity if you can find someone. Matter of fact, our lawyer considered bidding on our property we foreclosed on. As long as someone bought it, I don't care.

I wanted to do an update on this.

I just received word that the member has paid the firm in full.

Hopefully, we won't have to take it this far again with them.