Tax lien

Started by DavidF22 • 12 replies • 618 views

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DavidF22 (New York)
Posts: 91

Posted:

We have one home that was abandoned by the owners, leaving behind an undisclosed amount in unpaid property taxes, as well as about $78,000 to date in unpaid dues and assessments. Apparently the city’s property tax lien takes priority over the HOA’s claim, and the city sold its lien to a private investor. This investor is not paying any dues or assessments to the HOA for maintenance of the property. Shouldn’t the HOA be suing the investor for payment or filing a lien against the investor or fining the investor or taking some other action to at least see that someone pays for maintenance on the home other than the rest of us residents? Any advice on this kind of situation is appreciated. Thanks!

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Collecting owed money is one thing, and I doubt it will happen, but the new owner should be paying dues. Time for your attorney to write a letter to the new owner saying so.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Also check your governing docs. My Declaration has a section that talks about what happens after a sale due to foreclosure of a first mortgage (the sale wipes away past due assessments and other moneys owed, but assessments are owed from the date of sale). Our docs are silent about property tax sales, though. Yours may be different, and New York's HOA law may be different from Ohio's. All good questions for the HOA's attorney.

LetA (Nevada)
Posts: 2,679

Posted:

Sounds like the investor is now the owner of record and they should be paying any and all assessments from the date of sale. You should be billing the owner for all assessments from the date of sale. If the new owner is not paying assessments, start the ball rolling with letters of non payment, liens, collections and foreclosure.

Just a question here, does New York allow for an HOA to be a super priority over a mortgage lender? Why weren't YOU first in line before the taxman?

MarkW18
Posts: 1,290

Posted:

New York ain't a super lien state.

In regards to tax liens, every property in every county or parish has a tax lien on their property at one time or another. A tax lien is placed when it is owed and removed once it paid. Year after year.

If the investor paid cash and didn't go through escrow, it is possible that they did not clear title. The current owner is responsible for the tax bill.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

The HOA should let the new investor know they owe dues 1st. They may not be aware due to the way they bought the property. After that, if they do not pay, then you need to lien from the date they bought the property. The dues owed before that most likely is NOT the new owners responsibility. (Check with state laws as florida may not apply).

The HOA needs to have a rule in place about when they lien and when they CONSIDER foreclosure. Ours is 6 month we lien, 1 year we CONSIDER foreclosure. That way it's not just "random" when you place a lien on someone. Plus good people will try to work out a payment plan. This helps with that.

Former HOA President

MarkW18
Posts: 1,290

Posted:

When a HOA forecloses on a property and sells it to satisfy their lein, do you think they care about any of the other liens on the property? NOPE. So, if the property owes $5000.00 to an HOA, they sell for $5000.00. BUT, if they didn't clear title and the HOA can a previous lien, I am guessing the new owner is responsible. If the city foreclosed on their lien, it's too bad, how sad!

KellyM3 (North Carolina)
Posts: 2,239

Posted:

Generally, taxing authorities (government) will sell properties via auction to collection past-due taxes and thus clear the lien. Courthouse auctions are very down n' dirty with the properties being sold as-is with no communication or care about whether a buyer knows of an HOA or any other "clouds" on the title. It's truly "Buyer Beware!" That said.

My amateur advice (your mileage may vary):

1. Don't assume the new owner knows their financial obligations to the HOA. Communicate with them, first, without threat. The previous owners certainly walked away but don't assign that behavior to the new buyer. Courthouse sales are fast and nothing about them is "gentle" like buying from a broker/traditional closing.

2. If your HOA doesn't have a current lien for the dues owed by the previous owners, I'd hesitate to chase the new owner for the previous owner's dues delinquency but would start fresh and restore the monthly cash flow that currently paused on that property. Yes, it's a lot of lost collections but it's clear your HOA board chose, via procedure, to not collect on the debts owed by the previous owner. The new owner should not be responsible for that but should be responsible for paying dues as prescribed going forward.

3. If the new owner doesn't respond to good-faith communication, then pay a lawyer to learn about the property as part of the collections process. Do not allow a new owner to avoid dues payment and maintenance obligations. Follow your collections laws to the letter if the new owner is as absent as the old one (most aren't as it doesn't make business sense).

4. Don't assume the new owner is fully informed about the obligations assigned to the property......it's so important that I write it twice.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By DavidF22 on 06/27/2020 7:35 AM
[snip... ] the city sold its [property tax] lien to a private investor. This investor is not paying any dues or assessments to the HOA for maintenance of the property.

Buying and then owning a tax lien is not the same as having title to the property. Consider: "[M]ost municipalities sell their tax liens or tax deeds to investors, who then receive any subsequent payments to either remove the lien or to redeem the property. Buyers of tax liens will generally receive a tax certificate as evidence of their lien, and buyers of tax deeds will have the property. The municipalities of about half of the states sell tax liens; the rest, tax deeds; a few states allow municipalities to sell both." See https://thismatter.com/money/real-estate/tax-liens-deeds.htm . Does the OP's HOA have any legal grounds for trying to collect owed HOA assessments from the private investor (now in possession of the tax lien)? Without more information, I think not.

AugustinD
Posts: 5,144

Posted:

Information specific to New York, on the topic of tax deed vs. tax lien:

https://taxlienlady.com/StateGuide.pdf

http://www.taxlienguru.com/tax-deed-states.html

LetA (Nevada)
Posts: 2,679

Posted:

Luckily laws are starting to catch up to the modern era. HOA's here in Nevada can no longer swoop in and foreclose on a home with a mortgage. HOAs MUST notify the mortgage lender before they foreclose. Then the bank sends the HOA back assessments up to nine months if applicable.

MarkW18
Posts: 1,290

Posted:

Quote:

Posted By LetA on 06/28/2020 1:31 PM
Luckily laws are starting to catch up to the modern era. HOA's here in Nevada can no longer swoop in and foreclose on a home with a mortgage. HOAs MUST notify the mortgage lender before they foreclose. Then the bank sends the HOA back assessments up to nine months if applicable.

Which is the way it should have been in the first place. There should be no reason why a $1800 HOA lien supercede a $500,000 first lien. Banks will NOT lend in states with the Super Lien clause, I wouldn't.

KellyM3 (North Carolina)
Posts: 2,239

Posted:

Quote:

Posted By MarkW18 on 06/28/2020 1:50 PM

There's no reason why an $1,800 HOA lien should extinguish a $500,000 first lien. An HOA basically forces acceleration of the first mortgage by collecting dues via foreclosure. No homeowner should risk their half million dollar home over $1,800.

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