Final days leading up to Sheriff's Sale

MichaelT21 (Arkansas)
Posts: 200

Posted:

We have completed the foreclosure court case against our homeowner, have filed the proper paperwork for a sheriff's sale, and the house is on the docket to be sold at the courthouse steps in less than a month. The house is worth about $700,000. We know that it has a loan against it for about $400,000 and there are no other recorded liens, so there is about $300,000 equity. The homeowner owes us roughly $10,000 in dues/fees/etc, so the auction for the house will start at about $10,000.

Property taxes are current, and as said before, there are no liens from the water company, sewer company, or any other vendor. The mortgage company has not filed a lien, and since taxes are paid, it appears that the owner is still paying the mortgage.

There is an 8 month redemption period. It appears to me that the law will allow the current tenant to live there until the conclusion of the redemption period.

We have never heard a word from the homeowner, ever. I do not know if they live on the property or not. There is a car in the driveway, in good condition, but we do not know if that is the owner or not.

What is likely to happen? I would be surpised if an owner of a $700,000 with $300,000 equity allows it to get sold on the courthouse steps. It seems too easy that a check will just show up in the next three weeks, but maybe?

Any guesses? I know that no one knows this particular situation, just wondering in general.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

The owner will have to cough up the 10K on the day of the foreclosure. If not, then the first bid will go to the HOA for 10K and $1. After that it is open to all the others who want to bid. Depending on your state, there will be a period of "right of redemption". That may be as little as 0 to up to a year. Meaning the original owner can come back with the money they owe and buy it back. Which sticks the owner with the bill of any repairs they may have done in that period. Hence why a home will most likely set with little work done to it for up to a year of foreclosure.

I know what you may be thinking... Why doesn't the HOA buy it? The WORST IDEA EVER!!! Do NOT have the HOA buy it and think they can sell or rent it. The HOA would have to pay out the $10,001 to purchase. Make the house payments owed. Pay the HOA payments. Pay the taxes. Make all the repairs and maintenance costs. ALL of which is coming out of the HOA budget. Can your HOA afford to pay out the $2K plus a month for all of this? Plus you think ALL the members will agree with what is done with the house? Oh and if sell it for a profit, you OWE the taxes on the sale.

My best recommendation? Find someone to buy the house at the foreclosure. It can be ANYONE even those in the HOA. It's a PUBLIC sale after all. Let the new owner come buy the place and become a HOA member. It will take care of the house. Stop the bleeding. Plus the HOA will start getting paid again.

Former HOA President

MaxB4
Posts: 3,513

Posted:

Melissa is THE expert!

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I have done a foreclosure before... My person didn't pay. Ended up becoming a tax foreclosure in the end. Took about 2 years for everything to get taken care of. Which included the HOA being included in the tenant/owner lawsuit. Don't expect this to not take some time...

Former HOA President

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By MelissaP1 on 03/03/2023 1:33 PM
I have done a foreclosure before... My person didn't pay. Ended up becoming a tax foreclosure in the end. Took about 2 years for everything to get taken care of. Which included the HOA being included in the tenant/owner lawsuit. Don't expect this to not take some time...

While President of my HOA we did 4 and made a boat load of money.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Again dumbest idea ever for a NON-PROFIT corporation...

Former HOA President

MaxB4
Posts: 3,513

Posted:

Made $100K on rentals after expenses and paid no income tax on the $100K.

Yep, dumbest idea ever!

MarkM19 (Texas)
Posts: 1,459

Posted:

In the only case that our Ca. board ever took all the way. The lender came in on the last day and took the home. The only benefit to our HOA was the Big Bank had to start paying the dues.

WendyM5 (North Carolina)
Posts: 1,522

Posted:

Quote:

Posted By MaxB4 on 03/03/2023 1:34 PM

Posted By MelissaP1 on 03/03? /2023 1:33 PM
I have done a foreclosure before... My person didn't pay. Ended up becoming a tax foreclosure in the end. Took about 2 years for everything to get taken care of. Which included the HOA being included in the tenant/owner lawsuit. Don't expect this to not take some time...

While President of my HOA we did 4 and made a boat load of money.

how can people be so dumb as to not pay hoa dues? and then ignore letters from lawyers?
Seems like this has happened once in 25 years where I live. How can you have 4 in such a short time? did your hoa has some sort of policy that created such a large amount of foreclosures?

vis ta vie

TimB4 (Tennessee)
Posts: 21,061

Posted:

The Association may or may not get what is owed to them from the foreclosure.
So, keep in mind that the goal is to stop the bleeding.

MichaelT21 (Arkansas)
Posts: 200

Posted:

Well, it turns out the owner was out of the country for the last 1.5 years and wasn't home to receive the notices. I guess whomever the "guest" was at the house that spoke with the process server also failed to let the owner know about the issue. We have an e-mail for them, but I guess they must not have been checking their e-mails either. Now they'd like to pay.

Who wants to bet that, less than 30 days from the date of the sheriff's sale, they will try to barter down how much they owe??

WendyM5 (North Carolina)
Posts: 1,522

Posted:

You never served them papers. Of course they would want a reduction in what they owe

vis ta vie

LetA (Nevada)
Posts: 2,679

Posted:

I may be wrong, but the laws here in Nevada was changed a few years ago. The HOA nor board members or their immediate families are allowed to
bid on their HOA's foreclosures.

As for your foreclosure, you did not properly serve the owner, your foreclosure is null and void. I would settle with them
reduce the late fees and attorney fees preparing and leading up to the foreclosure as you did not properly serve the owner.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By MichaelT21 on 03/03/2023 4:46 PM
Well, it turns out the owner was out of the country for the last 1.5 years and wasn't home to receive the notices. I guess whomever the "guest" was at the house that spoke with the process server also failed to let the owner know about the issue.

"Serving process" is a big legal deal, with many i's to be dotted and t's to be crossed. Whoever resided in the house has now morphed from "tenant" to "guest." If this was a lawful tenant, and if the HOA has another address for the owner, then I doubt process was properly served. The HOA attorney should be making the determination of whether process was properly served or not, along with whether it is worth fighting.

SheliaH (Indiana)
Posts: 6,964

Posted:

Quote:

Posted By MichaelT21 on 03/03/2023 4:46 PM
Well, it turns out the owner was out of the country for the last 1.5 years and wasn't home to receive the notices. I guess whomever the "guest" was at the house that spoke with the process server also failed to let the owner know about the issue. We have an e-mail for them, but I guess they must not have been checking their e-mails either. Now they'd like to pay.

Who wants to bet that, less than 30 days from the date of the sheriff's sale, they will try to barter down how much they owe??

times!

I HATE people making excuses.

You knew you still had a house and assessments were due. These days there's a thing called automated payments - is this person trying to say that wasnt an option? What did he or she do about the homeowners insurance or utilities? I bet the first got paid and the second turned off. If that's the case, wouldn't you let the association know you were out of town or at least provided the name of someone who could contact you? How stupid are people?

As far as the sheriff's sale goes, look out for the owner suddenly declaring bankruptcy the day before.
That stops everything, and then you have to fo a dance in the court with filing proof of claims and all that.

If this person is serious about paying, either grab it all in one shot (including attorneys fees, Kate fees and all that), or require half to be paid immediately before tge board even thinks of a payment plan. If anything is to be dropped, I might put up the late fees, but that's it. And I wouldn't do that until 90% of the debt had been paid.

Oh, and insist on automated payments. If the payments get declined, that's a formal of wire fraud and then it's off to the police or prosecutors office to file a complaint. If all of this sounds gangster, this is what I put up with for 5 years as board treasurer.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

MichaelT21 (Arkansas)
Posts: 200

Posted:

Regarding serving the owner:

A judge reviewed the service process and rules that our attorneys had served the owner via certified mail and this is approved in our state. They of course could appeal the judge's ruling. It is not the place of the HOA Board to know the ins and outs of proper service.

LayaS (Nebraska)
Posts: 249

Posted:

Quote:

Posted By SheliaH on 03/04/2023 6:23 AM

Posted By MichaelT21 on 03/03/2023 4:46 PM
Well, it turns out the owner was out of the country for the last 1.5 years and wasn't home to receive the notices. I guess whomever the "guest" was at the house that spoke with the process server also failed to let the owner know about the issue. We have an e-mail for them, but I guess they must not have been checking their e-mails either. Now they'd like to pay.

Who wants to bet that, less than 30 days from the date of the sheriff's sale, they will try to barter down how much they owe??

times!

I HATE people making excuses.

You knew you still had a house and assessments were due. These days there's a thing called automated payments - is this person trying to say that wasnt an option? What did he or she do about the homeowners insurance or utilities? I bet the first got paid and the second turned off. If that's the case, wouldn't you let the association know you were out of town or at least provided the name of someone who could contact you? How stupid are people?

As far as the sheriff's sale goes, look out for the owner suddenly declaring bankruptcy the day before.
That stops everything, and then you have to fo a dance in the court with filing proof of claims and all that.

If this person is serious about paying, either grab it all in one shot (including attorneys fees, Kate fees and all that), or require half to be paid immediately before tge board even thinks of a payment plan. If anything is to be dropped, I might put up the late fees, but that's it. And I wouldn't do that until 90% of the debt had been paid.

Oh, and insist on automated payments. If the payments get declined, that's a formal of wire fraud and then it's off to the police or prosecutors office to file a complaint. If all of this sounds gangster, this is what I put up with for 5 years as board treasurer.

This is an odd story or the story is embellished. It's sure possible because nothing surprises me anymore but I am skeptical. I would be surprised if an owner in MichaelT21's upper-class neighborhood would not take care of their HOA business before leaving the country for an extended time period.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

It should be noted that part of the Foreclosure process includes a PUBLIC notice. This notice purpose is to show that PUBLIC notice was given that anyone with PUBLIC access to a PUBLIC resource could read/see. It allows one to still go with the process legally if the party chooses to NOT respond or doesn't. Not unlike how one can divorce a spouse that can't contact. You give a public notice of the intent. No response it is considered no response.

Again this is the reason you serve the HOA property address whether or not the person lives there. You have those tenants that will not communicate or give stuff to their landlords. It may be vice versa as well. The point is the property was served or given notice whether or not the owner takes action.

Also they are PUBLIC auctions where anyone can come and go to. It may look "unethical" for a board member to show up at one. However, they are part of the PUBLIC. This should not hold them back from being part of the PUBLIC. They may have some kind of "insider" knowledge yes. However, so does EVERYONE else. They can choose to show up and bid. Just as long as it's not a HOA bid. They spend their own money. Side note: Our lawyer that conducted the auction on the stairs of the courthouse was actually going to bid on the property. Yes. The lawyer who did the foreclosure could have made an OPEN bid if they had choose. Why restrict your market for a property? You want to get rid of it correct?

Former HOA President

TimB4 (Tennessee)
Posts: 21,061

Posted:

Michael,

I would not waive legal costs. I would consider waiving some of the late fees.

Late fees are penalties to attempt having assessments paid on time.

Legal costs were actual expenses to the Association that need to be paid.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By TimB4 on 03/04/2023 11:11 AM
Michael,

I would not waive legal costs. I would consider waiving some of the late fees.

Late fees are penalties to attempt having assessments paid on time.

Legal costs were actual expenses to the Association that need to be paid.

I agree.

LetA (Nevada)
Posts: 2,679

Posted:

Sending someone a letter certified mail in some cases like small claims torts can be used as satisfactory service, but not in foreclosure proceedings.
Too many courts have ruled against HOA's using certified mail as notice of service because there were too many hinkey foreclosures. Courts and legislation are
now requiring process servers to physically serve the foreclosure papers on owners.

MichaelT21 (Arkansas)
Posts: 200

Posted:

Quote:

Posted By LetA on 03/04/2023 4:05 PM
Sending someone a letter certified mail in some cases like small claims torts can be used as satisfactory service, but not in foreclosure proceedings.
Too many courts have ruled against HOA's using certified mail as notice of service because there were too many hinkey foreclosures. Courts and legislation are
now requiring process servers to physically serve the foreclosure papers on owners.

In my state, the court approves of certified mail if all reasonable attempts to serve in person fail.

SheliaH (Indiana)
Posts: 6,964

Posted:

Quote:

Posted By LayaS on 03/04/2023 7:35 AM

Posted By SheliaH on 03/04/2023 6:23 AM

This is an odd story or the story is embellished. It's sure possible because nothing surprises me anymore but I am skeptical. I would be surprised if an owner in MichaelT21's upper-class neighborhood would not take care of their HOA business before leaving the country for an extended time period.

I wouldn't - there are just as many stupid and arrogant rich people as poor. I suspect this person moved and thought nothing would happen, although he didn't bother to tell the association what was going on. Or perhaps he left it to someone to do, but didn't bother to double-check to ensure it was done.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

LoriM15 (Florida)
Posts: 1,009

Posted:

Quote:

Posted By SheliaH on 03/04/2023 5:25 PM

Posted By LayaS on 03/04/2023 7:35 AM

Posted By SheliaH on 03/04/2023 6:23 AM

This is an odd story or the story is embellished. It's sure possible because nothing surprises me anymore but I am skeptical. I would be surprised if an owner in MichaelT21's upper-class neighborhood would not take care of their HOA business before leaving the country for an extended time period.

I wouldn't - there are just as many stupid and arrogant rich people as poor. I suspect this person moved and thought nothing would happen, although he didn't bother to tell the association what was going on. Or perhaps he left it to someone to do, but didn't bother to double-check to ensure it was done.

I live in what I guess you could consider an "upper-class" neighborhood and we have homeowners that just don't pay their HOA fees. One was a pathological liar who had a history of not paying anything on any bill until legal action was threatened. He didn't pay a dime for three years. Another is a woman who hasn't paid for 3 years and doesn't care. She pays her taxes but her home is now in foreclosure. She has about 10 cases against her for not paying her credit card bills. Another claimed his checks were being paid every month, but for 18 months he had been sending them to the wrong address and didn't seem to notice the money was never pulled from his account.

I think there are some people who don't mind "gambling" that they are going to lose a big asset and others who simply don't understand the power an HOA has to foreclose.

JohnS111 (New York)
Posts: 228

Posted:

Quote:

Posted By MichaelT21 on 03/03/2023 11:25 AM
We have completed the foreclosure court case against our homeowner, have filed the proper paperwork for a sheriff's sale, and the house is on the docket to be sold at the courthouse steps in less than a month. The house is worth about $700,000. We know that it has a loan against it for about $400,000 and there are no other recorded liens, so there is about $300,000 equity. The homeowner owes us roughly $10,000 in dues/fees/etc, so the auction for the house will start at about $10,000.

Property taxes are current, and as said before, there are no liens from the water company, sewer company, or any other vendor. The mortgage company has not filed a lien, and since taxes are paid, it appears that the owner is still paying the mortgage.

There is an 8 month redemption period. It appears to me that the law will allow the current tenant to live there until the conclusion of the redemption period.

We have never heard a word from the homeowner, ever. I do not know if they live on the property or not. There is a car in the driveway, in good condition, but we do not know if that is the owner or not.

What is likely to happen? I would be surpised if an owner of a $700,000 with $300,000 equity allows it to get sold on the courthouse steps. It seems too easy that a check will just show up in the next three weeks, but maybe?

Any guesses? I know that no one knows this particular situation, just wondering in general.

A close family member of mine has made millions by buying businesses and homes in foreclosure at pennies on the dollar. You never know; sometimes there are various issues that impede the original owner from acting to keep the property.

I'd go with Melissa's advice.

LayaS (Nebraska)
Posts: 249

Posted:

Quote:

Posted By LoriM15 on 03/05/2023 4:09 PM

Posted By SheliaH on 03/04/2023 5:25 PM

Posted By LayaS on 03/04/2023 7:35 AM

Posted By SheliaH on 03/04/2023 6:23 AM

This is an odd story or the story is embellished. It's sure possible because nothing surprises me anymore but I am skeptical. I would be surprised if an owner in MichaelT21's upper-class neighborhood would not take care of their HOA business before leaving the country for an extended time period.

I wouldn't - there are just as many stupid and arrogant rich people as poor. I suspect this person moved and thought nothing would happen, although he didn't bother to tell the association what was going on. Or perhaps he left it to someone to do, but didn't bother to double-check to ensure it was done.

I live in what I guess you could consider an "upper-class" neighborhood and we have homeowners that just don't pay their HOA fees. One was a pathological liar who had a history of not paying anything on any bill until legal action was threatened. He didn't pay a dime for three years. Another is a woman who hasn't paid for 3 years and doesn't care. She pays her taxes but her home is now in foreclosure. She has about 10 cases against her for not paying her credit card bills. Another claimed his checks were being paid every month, but for 18 months he had been sending them to the wrong address and didn't seem to notice the money was never pulled from his account.

I think there are some people who don't mind "gambling" that they are going to lose a big asset and others who simply don't understand the power an HOA has to foreclose.

Point taken Shelia and Lori. MichaelT21, in a previous post, described his HOA as "upper-class." He also posts about HOA issues that seem to me to be overdramatic. That is where my skepticism comes from. If I am wrong, my apologies to Michael. The post turned into a good discussion about HOA foreclosures. The main thing is that state laws vary and it's a complex undertaking.