HOA Defendant in Foreclosure

Our HOA received a Summons and a copy of a Mortgage Foreclosure Complaint and Notice of Lis Pendens. The homeowner in the action has filed for Chapter 7 Bankruptcy and is delinquent in Association dues in the amount of $75.00, so the Board has not placed a Claim of Lien against the property. We are going to wait until the bank forecloses. Does the HOA have to "Answer the Complaint"? Why was the HOA named as a defendant when we haven't placed a lien?

good answer glen.

it's something many people forget, bankruptcy "solves" all the debt owed BEFORE the date it is claimed. It does nothing for debt incurred AFTER, which is a separate issue. In fact, debt gained AFTER filing is practically guaranteed to be paid, because bankruptcy cannot be declared again for several years.

That's why credit companies say things like "Bankruptcy? No problem!"; they know you cannot file a paper and skip out on THEIR line of credit anymore. You are a guaranteed payer!

Employ an attorney for $75.00 due? That doesn't make any sense.

KatL,

You said: "We are going to wait until the bank forecloses." I'm afraid it may be too late! Even if you file the lien b/4 foreclosure is declared the assn is not guaranteed to receive any monies due. The bank is only concerned with recouping the amount of the mortgage. Since you stand a chance of getting some of the money back from the bankruptcy, IMO, the board should just save their time, energy and money and forget about a lien. I don't think it's worth it for $75 or less.

Hi Harold1,
This hs been discussed before, not sure if agreement was reached. In my condominium it states that when you accept the condition and documents of the association, you also uunderstand that this constitutes and automatic lien agaainst your property. Therefore, it would appear that the sooner tha management activates that lien by recordation at the courthouse, the better it would be. This view is not authoratative or a legal opinion but reason says that when the property is forclosed and there is any money left over, those with liens would have first crack. I understand that this kind of lien does not have much presedence, but for what it would cost to file the lien at the courthouse, it could prove fruitful. Also in a condo with an association lien against the property in case anything happens before the foreclosure would not effect this lien. It could allso be that if the property was taken back by the Mortgagee holder this entity would still carry the lien. I am not sure about most of this but I do know our documents state that accepting the CC&r's upon purchase, this creates a lien on the property. And when you think about it, in a condo, the share each unit commands is not just for the unit but a percentage of the total property.