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Can Condo Assn foreclose on condo even if I still owe money to bank?

West Palm Beach, FL |

My HOA filed a Complaint for Foreclosure and Damages for unpaid HOA fees and assessments. I still have a small mortgage (owe $16,000) on the property. In the Claim of Lien and Complaint, the HOA failed to mention the existence of the mortgage lien holder. Can the HOA still go forward with the lawsuit "as is" or does it have to amend its Complaint to notify and include the Bank of the foreclosure action?

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Attorney answers 3


The Association can proceed "As Is" in their foreclosure. They most likely are a subordinate lien holder. Very rare is the instance that the Condominium Association lien is superior to any mortgage, and even more rare is the instance where the Condominium Association lien is superior to a first mortgage or purchase money mortgage.

If you are not current on your mortgage, and especially if are in mortgage foreclosure, it is not necessarily a good idea for you Condo Association to be foreclosing too. Such an action is typically guaranteed only to be beneficial for the atttoneys that are foreclosing on behalf of the Condominium Association. When a mortgage company completes its foreclosure, it is liable to the Condominium Association for the last six months of unpaid maintenace by the mortgagor, or 1% of the original mortgage debt, whichever is less. (By the way, it is 12 months if it is a Homeowner's Association instead of 6.)

Hence, when the Condo Association forecloses before the mortgage company, the Association loses the right to collect that prior six months worth of money. Not to mention, in July of 2008, a new law was enacted so that all unit Condo owners must have insure their units in addition to that which is purchased by the Condo Association. Hence, if the Condo Association forecloses and takes possession, they will be responsible for: the taxes for the Condo; the past and ongoing maintenance for the condo; and the insurance for the Condo.

Thus, often a Condo Association Board will direct its lawyers to start the collection process, do the Claim of Lien, start the lien foreclosure, get a final summary judgment of forelcosure and a foreclosure sale date. but to attempt to get the homeowner on a repayment plan versus actually having to foreclose and take possession of the Condo.

At our firm, we have been helping unit owners take advantage of the 2008 change to the Condominiuum Act, namely the opportunity to submit a Qualified Written Offer.

Since we do more representation of Condo Associations than Unit Owners, we are very experienced in understanding the goals of the Condo Association Board and are able to usually bring cases to resolution and save both the Condo Owner and the Condo Association money.

Please contact us if you would like us to assist you in resolving this matter, or if you would like a referral to a firm in your area that is active like our firm in the Florida Bar RPPTL Condominium Law Committee. This means they will be very knowledgable of the machinations of the Condominium Act, Florida Statutes Chapter 718, and will be able to advise you as strongly as we would.

Please be sure to note if my answer was helpful to you.

Best regards,
Ken Walton.


Yes, it definitely can do so, and these days it is happening more and more. Condo and homeowners associations are becoming much more aggressive than they used to be in collection tactics, because they are having more and more trouble meeting their budgets due to the foreclosure situation.

The law of mortgage foreclosure and financial services litigation is a complex one. The emergency conditions which Florida is experiencing have caused the Association's attorneys to brainstorm ways of finding revenue, and these days Associations have a neat way of sidestepping the issue of the lender's mortgage - if they see that the mortgage holder has not started foreclosure, they foreclose against YOU but do not name the lender. If there are any second mortgages or other liens, they do name them. Then at the foreclosure sale, the association's attorney bids the amount of the judgment. If anyone bids more, they get paid in full. If no one else bids, the association gets to throw you out, and may even rent the property for a while. If they can find a tenant who pays enough to cover the mortgage payment, they can send in the payments on YOUR mortgage, and now own YOUR home, subject to the mortgage. Since the mortgage is small and you presumably have a lot of equity in your home, the association can then sell your home through a realtor and simply pay off the first mortgage at closing.

Since they cannot extinguish the bank's lien anyway because it is superior to them, by not naming the bank, they leave that entire issue in place. If they do not make the payments to the bank, then when the bank forecloses, they get their six months, which is all they would have gotten anyway.

Since an association foreclosure is basically indefenisble, if the homeowner wants to try to fight to save the home from the bank's foreclosure, he / she has no choice but to find a way to work things out with the association, since otherwise the association becomes more dangerous even than the bank was.


I think the HOA should name your mortgage company as a defendant, because if it goes all the way to a sale the first mortgage has to be paid or alternatively the new buyer will not have clear title. Maybe the HOA can proceed without addiong the first mortgagor, but i thin the better practice would be to include them in this lawsuit.

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