Owner foreclosed on by Bank and HOA

Started by SteveP5 • 11 replies • 1460 views

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SteveP5 (Florida)
Posts: 50

Posted:

Okay so one of our uinits has been forclosed on by the HOA for nonpayment. the owner was given 90 days to payup or vacate but the bank is forclosing too.
If the bank forecloses how does the HOA recover lost funds?

Today most homes are (well a lot of homes)are upside down in the mortgages meaning they owe more than the property is worth so if the bank forecloses there is going to be no funds available to the HOA for lost funds.

Is it even worth foreclosing on a unit for non payment of dues?

EllenS1 (Florida)
Posts: 1,148

Posted:

Steve,

I'd say no...don't spend money on a foreclsure action if there is not enough money left to pay your assessments. You can't get blood out of a turnip tho I can imagine having an attorney tell you to go for it.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

No, but you could sue the owner in small claims court. Just because he has been foreclosed on doesn't mean his bills are cleared out.

KirkW1 (Texas)
Posts: 1,665

Posted:

I would not waste money suing the (former) owner unless you have reason to believe that they have some assets. About the only thing to do is hope for better luck next time. When the bank forecloses you lose out is the general rule.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Steve,

It all depends on if there is substantial equity in the mortgage. Your association should be able to find that out from the lender and if there is, then do file a lein for dues owed. But you will not be first on the list of creditors who might get paid so make sure that when the property gets sold, that there would be funds available for the HOA. Otherwise, chalk it up to a loss..

SteveP5 (Florida)
Posts: 50

Posted:

Could the HOA still go after the homeowner after the bank has foreclosed?
Okay, so the homeowner hands the key to the bank and forward from that date the bank becomes responsible for the dues, but I can't see the homeowner walking away from funds owed to the HOA.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Steve,

You can't squeeze blood from a turnip! If there was nothing left over for the HOA after the foreclosure and the h/o is broke, what's the point of going after him. It may cost more in court costs and attorney fees than you would get back in delinquent assessments. That's why prudent BODs will place a "bad debt" line item in the budget to account for all these uncollectable delinquencies.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

If there was nothing left over for the HOA after the foreclosure and the h/o is broke, what's the point of going after him. It may cost more in court costs and attorney fees than you would get back in delinquent assessments.

Sure you can go after the HOA fees (in most states).

While they may have been foreclosed on, they might not be broke. This is 2009 and more and more people are just walking away from mortgages because they cant get a refinance or they bought when the market was high and want to buy a cheaper home. This does not mean they are broke or jobless.

Small claims: This is what happens in my state:
- File a claim in small claims court $20 (no lawyer needed)
- Present your case to the judge.
- Win!

Procedures for collecting on a judgment vary from state to state, but typically start with filing the judgment with the small claims court. If you don't know anything about where the other party works or what type of assets they may have, you can set up a time to bring them back into court and force them to tell you about their employment and assets. These proceedings are called "financial disclosure hearings," "information subpoenas" or "supplemental proceedings." Worst case scenario, the sheriff goes to their new house and starts taking things.

PS. Even if the bank forecloses on your property, they might not release you from the loss. Say you owe $150,000 on a mortgage and the bank forecloses and re-sells the property for $100,000. They can still come after you for the $50,000. It happens more than you think.

SteveP5 (Florida)
Posts: 50

Posted:

Hi Steve
well then it would seam that rather that go about collecting outstanding funds from a defunct unit by placing a lien on the property it would be simpler and perhaps faster to take the unit owner to small claims court to begin with.

SteveP5 (Florida)
Posts: 50

Posted:

Quote:

Posted By SteveP5 on 05/02/2009 1:46 PM
Hi Steve
well then it would seam that rather that go about collecting outstanding funds from a defunct unit by placing a lien on the property it would be simpler and perhaps faster to take the unit owner to small claims court to begin with.

also cheaper!

KirkW1 (Texas)
Posts: 1,665

Posted:

There is no doubt that you can continue to pursue the delinquent dues after the foreclosure. But you should realize that your chance of recovery is not very high. I would not recommend spending any significant amount of money. And only spend the time if you have someone with nothing better to do.

AmyA1 (Washington)
Posts: 101

Posted:

We are thinking about sending them to a collection agency. Just like everyone else, we don't have the time to sit in court all day or worry about how to claim the judgement, or run to the courthouse to file liens, or paying the attorney for foreclousre costs.

A collection agency also posts on thier credit report.

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