Can I buy a house we force a sheriff's sale upon?

MichaelT21 (Arkansas)
Posts: 462

Posted:

We have a house that is severely delinquent in dues, and have initiated a foreclosure lawsuit. The lawsuit is nearly done and it appears the Board will be voting next week whether or not we want to force a sheriff's sale on the subject house.

I am wondering if, as a private citizen, can buy this house? Or, because I am the president of the HOA that initiated foreclosure, am I prohibited from buying it?

TimB4 (Tennessee)
Posts: 21,059

Posted:

Are you prohibited? No, of course not.

What perceptions might it give other members? I think you know the answer to that.

JohnT38 (South Carolina)
Posts: 1,631

Posted:

Quote:

Posted By MichaelT21 on 10/25/2022 11:45 AM
We have a house that is severely delinquent in dues, and have initiated a foreclosure lawsuit. The lawsuit is nearly done and it appears the Board will be voting next week whether or not we want to force a sheriff's sale on the subject house.

I am wondering if, as a private citizen, can buy this house? Or, because I am the president of the HOA that initiated foreclosure, am I prohibited from buying it?

I'll let others weigh in on the legal side of this but if you do buy the house the entire Board may very well lose the trust of the homeowners.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By MichaelT21 on 10/25/2022 11:45 AM
We have a house that is severely delinquent in dues, and have initiated a foreclosure lawsuit. The lawsuit is nearly done and it appears the Board will be voting next week whether or not we want to force a sheriff's sale on the subject house.

I am wondering if, as a private citizen, can buy this house? Or, because I am the president of the HOA that initiated foreclosure, am I prohibited from buying it?

Another SFQ

AugustinD
Posts: 1,027

Posted:

By my reading, the Washington Nonprofit Corporation Act views this as a conflict of interest and puts conditions on the sale. This seems to be the most important condition:

the board in good faith authorizes the contract or transaction by the affirmative vote of a majority of the disinterested directors even though the disinterested directors are less than a quorum

More at https://app.leg.wa.gov/RCW/default.aspx?cite=24.03A.615

Optics-wise, I expect I would not think much of a President who did this. It seems like the President would have an unfair advantage. And a board might be happy to help. Maybe because they think they are not paid enough.

This forum has seen reports of directors who purchased HOA/COA properties at foreclosure auctions (where the properties were in the boundaries of their respective HOAs/COAs). They are always spoken of disparagingly.

CathyA3 (Ohio)
Posts: 6,299

Posted:

If you're intending the purchase this home, then you have a financial interest in forcing a sheriff's sale and you must recuse yourself from all discussion and voting on the foreclosure.

Along with the other commenters, I believe this is the essence of unethical behavior and using your position on the board for financial gain. There are a few things that that board members can't do that other homeowners can if they take their fiduciary duty seriously, and this is one of them - it goes with the territory.

That said, it isn't illegal as far as I know, so if you want to trash your reputation and risk homeowners holding a recall election then you can do so.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Michael

While not a good optic for a BOD Member, but do as you wish. If it goes to auction, you may be up against some that do this as a business. Be prepared for payment process if you win the auction.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

If it is up for PUBLIC auction then it's open to the PUBLIC. Are you part of the "public"? Then you can go to the foreclosure sale and buy it. Mind you that if it has a mortgage on it, you pick that up too. So you will have to pay the taxes owed, HOA dues, repairs, auction bid, and all cost associated with buying a home. You don't necessarily get the house for the foreclosure bid.

Plus each state has a different "Right to redemption" time period. Some states have 0 and other up to a year. That means the original owner can buy back the house after paying everything owed during that period. So you have to wait for that time period to run it's course.

The HOA should NOT buy this property. Bad idea.

Former HOA President

MaxB4
Posts: 3,513

Posted:

Michael needs to resign from the Board just for thinking about doing this!

LetA (Nevada)
Posts: 2,679

Posted:

Check with an attorney. after all the HOA foreclosure mess in NV, Board members are prohibited from bidding on properties they vote to foreclose on.

KellyM3 (North Carolina)
Posts: 2,239

Posted:

Buy it from the bank once the bank wins the auction. Then Michael can pay off the first lien and own the house.

JohnT38 (South Carolina)
Posts: 1,631

Posted:

Quote:

Posted By KellyM3 on 10/25/2022 2:36 PM
Buy it from the bank once the bank wins the auction. Then Michael can pay off the first lien and own the house.

If Michael is on record voting for the foreclosure and he buys the house then he should be forced off the Board.

AugustinD
Posts: 1,027

Posted:

Quote:

Posted By LetA on 10/25/2022 2:33 PM
Check with an attorney. after all the HOA foreclosure mess in NV, Board members are prohibited from bidding on properties they vote to foreclose on.

It appears this went into effect about a year ago. Here's the Nevada statute section:

NRS 116.31164 Foreclosure of liens: Procedure for conducting sale; satisfaction of lien before sale; persons prohibited from purchasing unit; execution and delivery of deed; use of proceeds of sale.
7. The following persons may not purchase the unit:

(a) Any person who was involved in the process of foreclosing the association’s lien pursuant to NRS 116.3116 to 116.31168, inclusive, including, without limitation:

(1) Any person who exercised discretion in any decision relating to the foreclosure of the lien and any person employed by such a person;

(2) A collection agency used by the association to collect an obligation relating to the unit;

(3) A community manager of the association and any of his or her assistants;

(4) A member of the executive board of the association; or

(5) An attorney who provided representation to any of the parties with regard to the foreclosure of the lien;

(b) Any person who is related by blood, adoption, marriage or domestic partnership within the third degree of consanguinity or affinity to a person set forth in paragraph (a); or

(c) The person conducting the sale or any entity in which that person holds an interest.

MichaelT21 (Arkansas)
Posts: 462

Posted:

Thanks for the discussion. Your responses are on point and about what I thought.

No, I have zero plans to buy the house. Just wanted to think about how it might work if I was interested....

I'd much rather the homeowner actually paid their dues and legal fees. But, they have made zero contact with the collections attorney in the past 5 months. The summary judgment date is Friday. If they do not make contact by Friday, the foreclosure attorney will ask for summary judgment due to defendent failing to show, and then we will have the option to force the sheriff's sale of house.

Nobody knows the owner, where the owner is living, or anything. They stopped mowing the lawn months ago and appear to be completely neglecting the house.

It will be good to get an owner that wants to take care of the place in there.

JohnT38 (South Carolina)
Posts: 1,631

Posted:

Quote:

Posted By MichaelT21 on 10/26/2022 8:03 AM
Thanks for the discussion. Your responses are on point and about what I thought.

No, I have zero plans to buy the house. Just wanted to think about how it might work if I was interested....

I'd much rather the homeowner actually paid their dues and legal fees. But, they have made zero contact with the collections attorney in the past 5 months. The summary judgment date is Friday. If they do not make contact by Friday, the foreclosure attorney will ask for summary judgment due to defendent failing to show, and then we will have the option to force the sheriff's sale of house.

Nobody knows the owner, where the owner is living, or anything. They stopped mowing the lawn months ago and appear to be completely neglecting the house.

It will be good to get an owner that wants to take care of the place in there.

Why do I get the feeling that the post above would have been much different if people had said it was O.K for you to buy the house?

MichaelT21 (Arkansas)
Posts: 462

Posted:

Quote:

Posted By JohnT38 on 10/26/2022 8:06 AM

Posted By MichaelT21 on 10/26/2022 8:03 AM
Thanks for the discussion. Your responses are on point and about what I thought.

No, I have zero plans to buy the house. Just wanted to think about how it might work if I was interested....

I'd much rather the homeowner actually paid their dues and legal fees. But, they have made zero contact with the collections attorney in the past 5 months. The summary judgment date is Friday. If they do not make contact by Friday, the foreclosure attorney will ask for summary judgment due to defendent failing to show, and then we will have the option to force the sheriff's sale of house.

Nobody knows the owner, where the owner is living, or anything. They stopped mowing the lawn months ago and appear to be completely neglecting the house.

It will be good to get an owner that wants to take care of the place in there.

Why do I get the feeling that the post above would have been much different if people had said it was O.K for you to buy the house?

You're trying to read between the lines.

I have no desire to buy an additional house in the community in which I live.

LetA (Nevada)
Posts: 2,679

Posted:

Quote:

Posted By AugustinD on 10/25/2022 3:12 PM

Posted By LetA on 10/25/2022 2:33 PM
Check with an attorney. after all the HOA foreclosure mess in NV, Board members are prohibited from bidding on properties they vote to foreclose on.

It appears this went into effect about a year ago. Here's the Nevada statute section:

NRS 116.31164 Foreclosure of liens: Procedure for conducting sale; satisfaction of lien before sale; persons prohibited from purchasing unit; execution and delivery of deed; use of proceeds of sale.
7. The following persons may not purchase the unit:

(a) Any person who was involved in the process of foreclosing the association’s lien pursuant to NRS 116.3116 to 116.31168, inclusive, including, without limitation:

(1) Any person who exercised discretion in any decision relating to the foreclosure of the lien and any person employed by such a person;

(2) A collection agency used by the association to collect an obligation relating to the unit;

(3) A community manager of the association and any of his or her assistants;

(4) A member of the executive board of the association; or

(5) An attorney who provided representation to any of the parties with regard to the foreclosure of the lien;

(b) Any person who is related by blood, adoption, marriage or domestic partnership within the third degree of consanguinity or affinity to a person set forth in paragraph (a); or

(c) The person conducting the sale or any entity in which that person holds an interest.

It was ugly here in Nevada, BOD's electing to foreclose. BOD's then bidding on said property. Some properties were foreclosed on for less than $3000.00 with all the fees.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By JohnT38 on 10/25/2022 2:40 PM

Posted By KellyM3 on 10/25/2022 2:36 PM
Buy it from the bank once the bank wins the auction. Then Michael can pay off the first lien and own the house.

If Michael is on record voting for the foreclosure and he buys the house then he should be forced off the Board.

I agree.