HOA Member Used Stolen Identity to Buy Home

Hi!

Our association is in a real pickle. A person from California stole the identity of a man from Illinois and purchased a home, through a Santa Barbara mortgage company, that is located in our development. This person never paid a single payment nor did she pay a single HOA assessment. We believe that she was selling drugs and/or trafficking in stolen identities from the home in our development which, despite what this sounds like, is a very nice development with homes that range in price to about $1.5 million. (We are in Missouri).

So, the police, for whatever reason, ran down this person but she and her extended family had already gone on the lam. That hasn't kept people she knows from occasionally breaking into the home for whatever reason and doing who knows what? Last time, they took out a sofa and loveseat. (We call the sheriff's department but, unfortunately, only the sheriff seems to know what this person is wanted for; when deputies respond to the calls they question the 'thieves' and are told that they are the 'owners,' which isn't true but the deputies claim that they can do nothing because these people are the owners. I and the other board members, unfortunately, seem never to be around when something like this occurs and so the 'thieves' get away scot-free -- and we are no closer to finding out the whereabouts of our recalcitrant 'identity thief owners.'

The 'owner' left last March; the electric also was cut off in March. We had very cold weather AFTER the electric was cut off so we feel certain that the watr pipes in the home have burst. The people who have been sneaking into the house have torn up the rugs, pulled up tiles and other flooring -- searching for what we don't know. The original 'owner' had dogs and cats and there is pet excrement everywhere in the home. She left food in the refrigerator and that has now spoiled and on warm days the home puts off quite a stench if you standing in the home's backyard.

I started foreclosure proceedings until lawyers' fees became too high; I have added them to the lien we have placed on the property for back HOA assessments.

My problems are myriad. The FIRST mortgage holder sold the note to a SECOND mortgage holder who WILL NOT ANSWER their phone or reply to any correspondence. They have, however, hired a company called Service Mac to take care of yard work -- and nothing else. I have attempted to deal with Service Mac but to date our only communication from them was to inform us that they no one will be paying our HOA assessments. Not only that but the address that they gave to me -- and which I have verified -- results in all documents being returned to me as 'undeliverable.'

TWICE this home has gone up for sale on the courthouse steps; TWICE people have been there at the time of the sale with enough MONEY IN HAND to complete this sale and yet the lawyers who are handling this property -- and who are based in Overland Park, KS -- have twice pulled the house from the bidding process. The lawyers will NOT TALK to me about WHY they did this because I am not a 'stakeholder,' which I take to mean that I am not the property owner. Well, d'uh! She STOLE HER IDENTITY!! NO ONE IS HER!

I am at my wit's end. We do have a lawyer but they are unhopeful of us actually being able to foreclose.

I have thought about enlisting the help of our local Building Inspector to see if we might get the home condemned but what new can of worms will THAT open up for us?

Right now this property is into our HOA for $2,125 back assessments plus $1,500 lawyer's fees.

I hope that someone here has a good idea concerning what next steps I should take, including whether or not the condemnation proceeding (if it were approved) would be a good idea).

I am thanking you in advance for your help with this issue.

Also regarding the title holder, they need to sort out who is legally liable for fraudulently selling the home. Is the title company also on the hook? Have any criminal charges been filed? What is the status of the cases? Criminal cases can take a long time to wind their ways through the courts, so you should be prepared for a long wait and assume you won't see any money any time soon. Don't attempt to take any shortcuts here, because the last thing you need is for the association to have "unclean hands" as well.

Our thanks to all who have responded.

Kathy

Cathy gave good advice. Wanted to add something as I agree the issue is with the homes title. It is probably tied up in legal with the person who had ID stolen.

There is another way the home can be foreclosed on. Which may halp take the HOA out of this. It would be by the "tax man".

I am sure the taxes are not being paid. When that happens the government forecloses for unpaid taxes. This also happens if no one wins the bid at the HOA foreclosure.

It is a long process but would find out if it has a tax lien on it. If so, call off your lawyer. Let that process roll with your lien filed. Hope a house flipper picks up the home after. This will take another upwards to a year as right of redemption exists in many states. Right of redemption can be 0 to 1 year after foreclosure. So even new owner hands are tied till that ends.

Google: how does a tax lien foreclosure work? Upsolve has a good article describing it all.

It sounds like the original owner sold the home, but the buyer committed fraud/theft/etc. by purchasing the home using someone else's name/details/credit rating/etc. IANAL, but I suspect that the original owner still owns the property - but that's going to have to shake out in court and is going to take some time.

If I were the original owner, I'd be pretty miffed to find out I still owned a property that I'd wanted to get rid of and may not be able to afford now (assuming here that the owner now owns two homes). Do I owe back taxes or other things like HOA fees? What happens to my credit rating? I'd be talking to a lawyer and suing everybody in this chain of events: the identity thief, mortgage company, realtor, title company, etc.

The mortgage company and title company especially have an obligation to verify the identity of the buyer. Buyers around here have to provide proof of identity - at the very least a valid, current driver's license or state ID. I imagine our little identity thief provided fake credentials, but the lender and title company are well aware of things like money laundering and other fraudulent activities involving real estate - they should have looked harder. Speculating here, but the identity thief doesn't sound very "professional" or skilled to me, since their actions (not paying assessments) meant that they immediately came to somebody's attention. The professional criminal does a better job of hiding their tracks, at least for a while.

Unfortunately the HOA may also come in for some unpleasantness since they tried to foreclose (twice!) on a property where ownership was in dispute. Even if they were acting in good faith, which I assume they were, they did the thing. Which is why I recommended talking to a good lawyer to find out what the HOA's legal liability is.

The HOA is going to have to slow their roll and forget about collecting assessments for a while. Keep a lien on the property, cut the grass once in a while, maybe make sure there aren't any squatters or drug dealers in there, but that's about it until all of the legal wrangling is done.

(I hope some of our other readers who are hot to trot on foreclosing are reading this thread. This is an unusual situation, but it shows what can happen when an HOA jumps to foreclosure prematurely.)

First, I think you can leave the seller out of this argument. They sold their house and got their money. It's not up to them to know if it's a legitimate buyer or not - that's up to the mortgage company or the title company of the buyer.

Second, this is a perfect example of how an HOA needs to have an attorney and use them. I know a lot of people on this site think attorneys are only there to screw you. However, this is a very complicated case. There's no HOA self-help here - you need a professional to look at case law, understand the statutes, understand foreclosure laws, etc. Most likely there's going to have to be a lawsuit filed by the HOA to figure out who exactly owns this house.

Is this going to cost the HOA money? It sure is. And if you say you don't have enough money in your budget in a community of homes that cost over $1 million, then your monthly fees are too low. Every community needs to have a legal budget because these things do cost money. Sadly, sometimes it costs a lot to collect what is rightfully owed the HOA.

This most likely is not going to get settled for years. You should turn this case over to the HOA attorney and then sit back and not worry until they figure out who actually owns the house. As long as the exterior of the house is being maintained, there's not much you can do. If there are squatters, just keep calling the police. It's not a great situation, but eventually someone will buy the house and the HOA will get some money.

Board members have a fiduciary duty to the community to try and collect money owed to the organization. In this case, the only way this is going to get done is by paying an attorney to work on it. You are not wasting money to hire the attorney - you are spending the money needed to fulfill your fiduciary duty.

I agree with you completely.

Thank you. This is a good idea and I will act on it tomorrow.

We had a house 'flipper' twice try to buy the home at a foreclosure sale only to have the sale closed without commencing as he stood there with money burning a hole in his pocket. It is quite difficult to get $350M or so in cash or a cashier's check only to be told 'no sale' at the last minute. This guy would have done a beautiful job on the home, I have no doubt, so it breaks my heart to see this chance snuffed out, at least for the present time.

You're right; I have thought better of it and decided not to get involved.

Thanks for the advice.

Kathy