Florida Townhome Owners Association Taking Possession of Property in a Foreclosure process

So our HOA (Townhome’s) association board has started a new process of taking possession of homes that are under foreclosure by a bank, but due to the volume here in Florida can take years to finally settle. The home owners that are being foreclosed on by the bank owe past HOA dues and the board is taking possession and renting out the properties to collect the back dues.
1) Is this legal?
2) Does the HOA actually “own” the property?
I asked our HOA president about this and his response was to mind my own “F”ing business. He is a real-estate agent and his firm is doing the leasing of the properties so I am guessing he is making money off of these transactions. Even if it legal by the HOA I see his firm doing the leasing as a major conflict of interest it=f not just poor ethical judgement.

In many states, it's legal for a HOA to do its own foreclosure taking the house, but the title is "dirty," because the mortgage company's interest is superior. If the house is sold, the mortgage company has to be paid off first and the HOA keeps the rest. However, there's a risk because in many cases, the houses don't sell for enough to pay everyone off and the HOA ends up writing off what it's owed. That's why some go ahead with their foreclosure, but rent out the house if it's in decent shape. The rent payments are applied against the delinquent amount and ideally, the Association will get all its costs back by the time the bank gets around to completing its foreclosure.

As you might imagine, there are pros and cons to this approach, so the Board should be discussing them with the Association attorney before doing anything, and it may also want to check with its master insurance carrier to see if they need to add landlord's insurance (and the costs that go with it). It sounds like a good idea to rent the house and try to get some money back, but the landlording expenses may be more than what you may get in return - stuff like insuring the house, advertising for tenants, running background checks and possibly evicting the tenant for not paying rent or something else, and then fixing up the house again for the next tenant.

As former Board treasures, I found it was usually a waste of time and money to pursue a foreclosure when the association learned the mortgage company was making its move, because our lien would likely get washed out anyway. We would file a lien early in the collection process because if the mortgage company completed its foreclosure, it would be responsible for assessments from that date, so it was a way we could get SOME money. Some banks go ahead and pay off the HOA, but most don't and they always keep the house in the owner's name until it's time to sell, so technically the owner's still responsible. In the end, the bank doesn't pay and neither does the owner (who may be long gone) and meanwhile, the HOA still has to maintain the common area - like the building structure of that unit! This is why many HOAs are rolling the dice and pursuing their own foreclosure.l

You don't say if you're on the board, but I agree that your HOA president has a major conflict of interest. Who's to say he's not pushing for the Association to do foreclosures so he can profit? I'd be concerned a judge might reverse the thing if that came out, so you need to talk to the rest of your board so they can take action. He's also incredibly rude - you don't have a right to find out about someone else's account since you aren't the owner, but there's no reason to be snarky.

A few months back there was a gal?? from FL posting on this chat. She seemed very knowledgeable of FL foreclosure laws. Not to put words in her mouth but she was advocating the HOA foreclose, take possession of the home (even change locks), and rent it on a monthly basis via a real estate management company. Having the HOA staying directly out of the rental. The profits of the rental going to the HOA to defray any money owed on the property.

As Shelia said, the title might be "dirty" but the point was it could be an opportunity for an HOA to make some money on the deal. Some said it was sneaky, some said it was even illegal but she said all that aside, it can be and is being done.

She was not saying the HOA got a title as in they did not own the house.

As I said, she sounded like she knew what she was talking about and said it is being done all the time.

The gal might have been me, I am still here but have not been posting. By foreclosing on our lien, we made many thousands of dollars for our association, after expenses. The houses are now bank and/or privately owned but that money is still in reserves and offsetting HOA dues increases we would otherwise have to pay ourselves. I highly recommend foreclosing on the lien and renting the property IF your state laws allow this, as Florida does.

Anyone figured out yet I don't like HOA's?, yet I get a kick out of them every few years when they try their crap on me, I hate when they go away I get bored verbally harassing them with logic and facts.

Hi Allison. Glad your back posting, you always have good advice.