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(1) How does a HOA foreclose if no lien was filed at the time of bank foreclosure summons being issued & HOA is a co-defendant?

Orlando, FL |

(2)...Does the HOA have to issue a summons prior to foreclosure and if not, what other remedies does it have to comply with? (3)...In other words, does the HOA have to 'wait in line' until the foreclosure action is resolved? To date, HOA has not replied to the majority of the many written (and sent certified) questions of dispute. (4)...If a belated lien was recorded for a quarter of the amount claimed, is this the only amount the HOA can claim or sue for?

(A)...IF THE HOA FORECLOSES AND THE PROPERTY IS SOLD ON AUCTION, WHAT HAPPENS IF THE MORTGAGEE PREVAILS IN THE CASE AND THEREAFTER SELLS THE PROPERTY TO A SUBSEQUENT BUYER? DOES THE ENTITY THAT BOUGHT IN HOA AUCTION LOSE THE PROPERTY TO THE NEW BUYER OR WHAT OTHER REMEDY DOES THE MORTGAGEE HAVE TO SATISFY ITS FIRST LIEN IN THIS SCENARIO? THE MORTGAGEE HAS GIVEN NOTICE THAT IT WILL CEASE TO PAY THE PROPERTY TAXES FROM THIS YEAR AND HAS CANCELLED THE FORCED PLACED INSURANCE. (B)...IF THE MORTGAGEE PURCHASES THE PROPERTY ON THE HOA AUCTION, OBVIOUSLY FOR A MUCH LOWER AMOUNT THAN ITS CLAIM AS A FIRST LIEN HOLDER, WHAT HAPPENS TO THE UNRESOLVED CASE, PART OF WHICH IS ON APPEAL? (C)... FURTHER IF THE MORTGAGOR PREVAILS IN THE CASE, DOES THE BUYER, INCLUDING THE MORTGAGEE, IN THE HOA AUCTION LOSE THE PROPERTY? IF SO, TO ME, FLORIDA LAW APPEARS TO BE TOTALLY IRRATIONAL AND CONFUSING!

Attorney Answers 3

Posted

The HOA was included in the foreclosure as a defendant in the bank foreclosure suit. They may cross claim in that suit for a foreclosure of their lien, even if the lien is unrecorded. An association has a right to a lien regardless of whether they have actually filed a lien in the public records. Further, the association is not limited to the amount in a filed lien, but is also due all subsequently due and accrued assessments that remain unpaid.

Apparently you do have a lien filed by the Association and subsequent amounts due would be included in their ability to foreclosure on that recorded lien.

The HOA can independently sue on their lien notwithstanding the bank foreclosure and they don't have to wait in line. Indeed, their suit is more likely to get to the action block before the bank's case. The winning buyer at that foreclosure sale on the Association foreclosure will take the property subject to the bank lien (but they don't assume your debt - you are still liable on that).

I hope you found this response to be helpful. If so, please click on the button "helpful" and/or "best answer" as this guides me in writing content and style. The above answer shall not be considered rendering legal advice but instead a general response to a general question. Avvo is a wonderful resource but nothing can substitute for an in-depth consultation face-to-face with a lawyer. My response to your question is not to be deemed to create an attorney-client relationship, nor shall it create an obligation on our part to respond to further inquiry from the questioner.

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Asker

Posted

Thank you for your exceptional answer. Please comment on the additional information provided above?

Posted

The HOA is required to provide you with a 45-day Intent to Lien Notice (30 days for condos) before filing the lien and a 45-day Intent to Foreclose Notice (30 days for condos) before filing to foreclose. The HOA can foreclose at any time regardless of what's going on with the bank foreclosure. The HOA can foreclose pretty fast too because they do not have all the issues associated with a mortgage foreclosure. The HOA can also file to foreclose even if you are disputing or validating the debt.

The HOA can claim up to five years of past due assessments and the lien usually covers all future assessments and fees if it is worded correctly.

You should enter into a payment plan with the HOA or consider Chapter 13 bankruptcy to modify the mortgage and bring the assessments current.

I have a blog about this topic that may be helpful. See below.

This communication is not intended to create an attorney/client relationship. It is always recommended you consult an attorney in person to discuss your case.

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Thank you for your exceptional answer. Please comment on the additional information provided above?

Barbara Billiot Stage

Barbara Billiot Stage

Posted

Anyone who buys a HOA foreclosure with a mortgage on the property is getting temporary ownership. The bank can then quickly foreclose on the property because the new owner is not a party to the mortgage. The bank may be having issues and they stopped paying the taxes maybe figuring the county will sell it for a tax deed. The mortgagee cannot bid on the property if the mortgagee is the defendant being sued for foreclosure. I do know of one case in which the mortgagee let the HOA foreclose and then bid on the property when the mortgage foreclosure sale happened. I wouldn't have thought that would work but it did. If the mortgagee were somehow able to buy the property at the HOA auction the mortgagee is liable for any deficiency for both the HOA and the mortgage. Again, anyone who buys at the HOA auction will lose the property when the bank gets a foreclosure sale. The foreclosures are a mess. Laws passed in July that were supposed to fast track them have actually been beneficial for my clients with the banks walking away and dismissing their cases for two of my clients.

Asker

Posted

I was about to answer your good comment to my further information when it was apparently taken down. The information I was about to give was that in our case the MORTGAGEE is the LENDER/PLAINTIFF and we are the DEFENDANTS/MORTGAGORS/HOMEOWNER. Will this alter your answer in any way? I am also of the understanding that Mortgagees cannot bid for properties in Lender auctions as well as HOA auctions if there is a Ist lien action by the Plaintiff pending.

Barbara Billiot Stage

Barbara Billiot Stage

Posted

Yes, I got my parties swapped around. The mortgagee (bank) can bid on the property at the foreclosure auction, but I do not see this as being beneficial and have not come across any doing this. The bank can bid if it wants and usually submits a bid of $100 in its own action in case the bids do not meet the minimum bid. There is no rule I am aware of which stops a foreclosure by anyone because there is a lien action pending by the bank. HOAs foreclose a lot when the bank is taking too long to complete their foreclosure.

Posted

Much of your question is too fact-specific to answer in the general way possible on a web site. The HOA does not have to wait in line - if a mortgage foreclosure action is pending, the HOA will normally be joined as a defendant, and can cross claim in the same action for foreclosure. If you have defenses against the HOA resulting from its conduct and relating to disputes, you have every right to raise those as defenses. The HOA is not limited to the amount of its original claim if it forecloses, since the lien continues to accrue.

Your best course is to consult an attorney who is knowledgable in this area of law to see what options you have. If the mortgage debt exceeds the value of the property, you might be able to strip off and discharge the HOA lien in bankruptcy.

Please note that the above is not intended as legal advice, it is for educational purposes only. No attorney-client relationship is created or is intended to be created hereby. You should contact a local attorney to discuss and to obtain legal advice.

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