FORCLOSURES (DOES THE BANK PAY HOA DUES?)

We are in the State of California and have several homes in foreclosure in our complex. We have been told two different procedures for foreclosures! If the Unit is now "Bank owned," does bank pay the HOA Dues month-to-month until it is sold or does the bank pay the HOA Dues upon sell of the home? Thanks in advance for any info!

Kathleen, the current owner of record owes the assessment. The billing should continue as normal but don't expect to collect until the matter is resolved if at all.

According to our CC&Rs, if the current resident is delinquent on assessments, and we have filed a lien, once the property goes into foreclosure, we forfeit the lien.

In other words, all previous monies due to us are wiped out.

However, once the foreclosure is complete, and the bank takes ownership of the deed, the bank then becomes the "owner of record" and we can assess from the date the property was deeded to the bank.

Section 11. Subordination of the Lien to First Mortgage. The lien of the assessments provided for herein shall be subordinate to the lien of any first mortgage. Sale or transfer of any lot shall not affect the assessment lien or liens provided for in the preceding sections. However, the sale or transfer of any lot pursuant to mortgage foreclosure or any proceeding in lieu thereof shall extinguish the lien of such assessments as to payments, which became due prior to such sale or transfer. No sale or transfer shall relieve such lot from liability for any assessments thereafter becoming due or from the lien.

MicheleD,
I would refer you to JoeW's post on The Uniform Common Interest Act.
I have been reading that and there appears to be some acknowledgement of the mess that HOA's are expected to govern with. Is there a need to have more uniform laws, with some authority, for all types HOA's. Yes there is.

Your doc. are very similar to ours and therein lies the problem. Are they well enough written and supported to be enforced uniformaly in the different states. I admit my knowledge is limited, but in this country a legal debt is a legal debt and I know of no law (except HOAS) that decree if you don't pay your legal obligation for a long enough time, the debt is forgiven. Who and why dreamed that up. Businesses write off bad loans all the time, but they work like hell to collect as much as they can, and as far as I know this bad debt becomes a part of your credit history.

As far as the HOA getting their fair assessments, the HOA should make every effort to recoup these funds. In our condominium we have common water supply. We can and have shut off water to the individual unit because of not paying assessments. I believe we also can attach any rental fees the owner is receiving. You can of course turn it over to a collection agency.

I am sure everyone knows there is a crises in the sub-prime mortgage market that is starting to effect the whole mortgage picture. Property is not selling like it did in 2005 and houses are on the market longer and longer. Where is the incentive for a person to pay monthly assessments if they know they can wait until they sell the house and worse case they have a foreclosure ( are upside down in their mortgage) at some point and they won't have to pay any of these back assessments. It is not a pretty picture and needed fixed twenty years ago. It is not a healthy regime that is 30% owned by the banks or have been foreclosed on. If one bank or a group of banks decide they want to run the HOA (condo) who's to stop them if they have the votes.

Brad,
Exactly my point. This law in Florida makes about as much sense as most of the laws on HOA's in this country. The Flrida Law was obviously a compromise and an attempt to get the HOA's something. But it makes no sense. Why should HOA's have to settle for less than their just assessments, and keep in mind, everytime this happens it comes right out of the equity of each individual home. We are, in effect, subsidizing the deliquent owner. Should the associations make concessions to owners that are deliquent for good reason? Of course they would and do, but that is their election and fair right to decide, in some cases the states are saying, "When you move into this Regime under the state law, the state can intercede and charge each homeowner an undetermined amount of money to give to an person that don't even live in the association."

Farfetched? Of course, but true.

Michele,
If your owner decides not to pay assessments and just refuses to pay, the association tries to get him to court, times passes, more time passes, he goes into foreclosure, at foreclosure the association is out their money and the owner never has to pay. The association can then start charging the new owner.
Brad (I believe) says a new law in Florida gives the right to the association to collect half the money owed from new owner. New owner had nothing to do with debt and state has decreed in their wisdom to only allow the association to loss half the money owed to them, and the debtor walks away paying none of it.

Wow, the mortgage companies must have some legislators in their hip pockets. It is unbelievable to me that if a lender forecloses that any lien is extinguished. I always looked at liens as a "first come, first served" queue. The superlien put associations at the front of that queue for a certain amount of $$ (i.e. not the entire lien perhaps, but for a few months).

Our documents say it is the previous owner we must go after even in case of sale, but the POAA changed that and if we reveal monies owed in the packet, we have successfully collected them from the new owners. If the person has not asked for a packet then we have successfully collected from the new owner also. I would have thought that our docs took precedence here, but apparently not, so that is one time the state helped us out!

Michelle,

What State are you in? Has your Association ever filed a lien for attorney fees to enforce CCR's? We felt forced to hire an attorney because a occupant (renter) was running a day care out of one of the homes in our subdivision and would did not quit even after the HOA sent a letter to the Homeowner quoting the CCR's regarding business use being strictly prohibited. The Homeowner who has been very bligerent and uncooperative and feels he doesn't owe the attorney fees. We have a letter from the Dept. of Early Learning who is the governing agency that approves licenses for day cares in single family residences. We filed a complaint with them and they sent an investgator out and determined that our claim was valid. So we feel this homeowner owes the legal fees.

"This is a fine mess your got me into this time Ollie"

Everything you read talks about how Managed Home Associations are the wave of the near future. I hope that the present Professional Managers have a strong voice in the changes forthcoming. I realize there are bad companies, but just this one little post shows what a mish mash is out there. Who else has a knowledge base to control this change. Do you want the pols to do it, or maybe the lawyers, or maybe the Feds, maybe the states? One thing for sure we don't want who ever dreamed up what we have now, and the group I listed prior is the group that gave us this.

An aside: In our condo we could have a debt of well over 15K if an owner don't pay his assessment, special assessment, insurance or oher fees if the owner doesn't pay for 18 months, plus the yearly assessment to our POA of the Development which would amount to maybe 1.5K. Over a 18 month period.
I understand the condo can lien the property and can hire a Collection agent and if the person has any money get some of it. But my experience is one of the first things to not pay is the costs of a second home or a rental unit, which amounts to exactly the same thing, and if there is any equity in the home, you are in line to get some in the end, but, today a lot of mortgagees find them self in an upside down mortgage (a mortgage where the value of the house is not enough to pay off mortgage)

"One thing for sure we don't want who ever dreamed up what we have now, and the group I listed prior is the group that gave us this. "

What makes you think that the MCs aren't part of the problems we see now? Certainly around here their voices are heard loud and clear. An example would be the goofy change to the POAA this year that let them, and them only, charge more for a packet and have it indexed to the CPI. Why is actually licensing of managers so hard to obtain in most states? Association law is the same as all others, beholden to special interest groups. The pols have listened to the lobbying groups to generate their laws, and the lobbying groups include managers and builders.

No, Karen, we took the case to circuit court.

We petitioned the court to compel the owner to comply with the deed restrictions and issue an injunction against the violations.

We have taken 2 homeowners over the past 10 years to court to enforce the deed restrictions and won both cases. Only one homeowner had a lien already in place prior to the court case.

The 2 lawsuits did a few things:

1) they communicated that the HOA does have the cajones to enforce the restrictions

and 2) they communicated that the courts will uphold CC&Rs.

We have had to get close to filing a few more times over the years, but when the residents hire attorneys to try to defend them, we are finding that after their attorneys talk to ours and read the 2 judgments we obtained, they encourage the owners to comply and settle with us. They have had an excellent preventive effect.

As far as assessments, we don't need to go to small claims. We file a lien at the earliest possible moment our docs allow us to.

Michele,

Thank you for the information. I thought small claims was the avenue to pursue since I was trying to be nice to this homeowner, but he has shown his true colors on this one. We will just wait until he sell the house to get our money.

Judith,

Funny thing, he pays his monthly dues but refuses to pay these legal fees. Go figure!

" Funny thing, he pays his monthly dues but refuses to pay these legal fees"

People get hung up on the oddest things. We had a similar situation and when he went to sell his real estate agent called and said "could we call it something else as the guy is absolutely irrational on the subject". I was glad to see him move frankly.