Banks ignoring Leins???

Hello, this is my first time posting here.

My complex (over 100 units) is in serious financial trouble. We have had lots of foreclosures and lots of people not paying their $250/month dues.

We are not getting dues from over half the units. Even new owners aren't paying!

Due to upside down mortgages, foreclosing on the units isn't a good idea.

I thought liens would be the best solution, but then some board members said that when banks foreclose on the homes they usually get away with not paying the liens anyways.

How do we avoid this? Should we take each individual delinquent homeowner to small claims court instead?

We hope to fix this on our own without the state stepping in.

"Extinguished" as in "knocked out/ignored/dropped"???

So then I guess our only recourse is small claims court? for 50 homeowners? oh dear!

Thanks for your reply.

(I am in CA btw)

In our state we have what is called the superlien which means that if a bank forecloses the association is paid at elast 6 months of dues or what is on the account whichever is the lesser amount. for the reamining amounts we send them to a collection agency. contingency so no addtional out of pocket and we get at worst only $.60 on the dollar but it is better than nothing. why not step up the collection efforts before they get too far into debt with you? The association or management can file the liens without legal counsel and so remove some of the cost. if you go to small claims and win a judgment unless you are willing to do the addtinoal footwork and have the information to serve a garnishment or sieze assets that judgment will just sit there until they need to clean up their credit.

Generally there is a priority in liens. And generally it goes something like:
1) Government
2) First Mortgage
3) HOA
4) Second Mortgage

What this means is that if the bank holding the first mortgage forecloses then if the sell the house for more then is owed, they pay off the lower priority mortgages. If there is still money left over then the owner receives that.

But in an upside down situation the bank does not recover its loss. Now in some states the HOA is entitled to some dues from the bank. And while the bank owns the lot they are responsible for paying dues. In Las Vegas HOAs have resorted to filing a new lien and starting foreclosure against banks. Of course the banks pay because they don't want to lose everything.

Banks could care less about hoa assessments. Most don't keep up with those payments when a property is undergoing foreclosures. They also let properties get into disrepair. (check out the lender offender site) If enough people nationwide started a movement to have hoa assessments require lenders to escrow assessments as they do for insurance and taxes we wouldn't be in this mess. Lenders require escrows (insurance) because they want "their" property protected, and (taxes) because they know if not paid the property would be taken over. Why is it funds are escrowed for other items and not assessments? Because we have no lobbyists and because our representatives hear nothing about it.