forclosures

hi everyone. We have to homeowners that are way behind. We went through the whole legal process (4 phases) and we are pretty the end where our only option is foreclosure. The lien and collection agency yielded no results. The homeowners are not in foreclosure. So here is my question.

My legal consult stated proceeding the foreclosure might yield the same negative results. Matter of fact, it would cost a lot of attorney fees to process and there is a gamble we are not going to get any of that in return. What is other HOAS doing in similar situations?

correction, homeowners are not in chapter 13 bankruptcy.

Tim is 100% correct. It just stops the bleeding. It also puts the house up for possible auction which the HOA does NOT want to own. So your decision now is to have more patience and keep the lien on the home or stop the bleeding. Liens should keep going till they sell the home. Which at that point the HOA should collect back it's legal money and back dues. A foreclosure is going to take some more money and time. Plus depending what state you live in, there is a right of redemption that can go up to a year. Meaning your HOA may not collect any money as the bank is paid first and the home may stay empty for a year.

So if it were me, I would continue the lien process for an extended period of time with frequent monthly notices sent to the owner on the lien status/money owed. Make sure to mention the next step will be foreclosure. Give it a year and then revisit the foreclosure idea again. By that time they either feel your "harassing them", pay up, or put the home up for sale.

I've done a foreclosure and don't recommend it for every situation. Our case the owner was ripping off their tenant and was threatening arson to our HOA. A homeowner that isn't in bank foreclosure has better chance in catching up in dues than those in protest or broke.

Why would the new owner not be required to pay past assessments? They are attached to the property so subsequent owners inherit what is owed.

Florida is only state that I know of that new owners pick up the debt of the previous. Which I would again verify. Otherwise, new owners do not pick up the previous debt.

This is true. If the title company finds the debt it is paid by the buyer or seller at closing. If the title company misses it, the title insurance covers it. The debt still remains with the property until paid.

At least it doesn't in Calif.

I hear some of my fellow HOA owners screaming for foreclosure when someone falls behind in their dues. In my experiences (now on my 7th HOA) there are few situations where it made economic sense for the HOA to do a foreclosure. In some cases, the foreclosure could cost the HOA more then the dues owed. It is something one has to take a hard look at before considering.

No one would buy a home with an existing debt, which is the main reason people go through a title company and mortgage companies require sales go through a title company, to ensure that all debts connected to the property are paid. If the lien did not remain with the property, why would the mortgage company or new owner care if it is paid or not? It would be the old owner's problem.

The new owners do not technically "pick up the debt of the previous owner" because the debt is attached to the property not the person. That is why a lien has to specifically name the property to which it is attached and it is filed with the property records.

thanks, everyone.

I agree, there must be a way to stop the bleeding. So far, not pursuing legal action helps. We did do judgement but that was the final decision to hold back since we are way too far in legal fees. It would be much cheaper to put multiple liens to his house if that was possible then to take the next step, foreclosure.

I'll have checked the HOA WA laws and probably the real estate laws to confirm the debt staying with the house. That would be great if it were, then we would have to worry about moving forward to foreclosure. Eventually, the house would be sold and we will get most of our legal cost back. It is tough dealing with these situations.

This makes another good argument for not jumping into a foreclosure too quickly as the HOA still may not get any money, which the OP alluded to. I'm not sure why it was directed to me, nothing I wrote contradicts this.