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HOA settled with previous homeowner on an 18k lien. How long does previous owner have to pay?

West Bloomfield, MI |

Last summer I put in an offer on a condo, never heard back. Turns out there was and 18k HOA lien. Since then the lien has been settled and they're waiting for payment, but they won't put the condo back on the market until they've received the settlement. I'm looking to make a full cash offer on this home, but I'm tired of waiting. How long does the previous homeowner have to pay the settlement? Is there anything I can do to make this offer sooner?

Attorney Answers 3

Posted

Just make the offer. Any liens will attach to sale proceeds.

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Asker

Posted

The home is owned by Freddie Mac now. Just call them and make an offer without them listing it? Or does FM change things?

Robert E. Lee Wright

Robert E. Lee Wright

Posted

Just call them and make the offer. Let them tell you if there is a problem.

Asker

Posted

Got it, thank you. I'll try it in the morning. Thanks!

Posted

To answer your question regarding timing, this will depend upon the deal made between the HOA and previous owner. The settlement could have been for a payment made over several months or may be due in full by a certain time period (typically 30 days). You can try to call the HOA representative to get an answer or details regarding the settlement, but they often will not release this information to third parties.

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Asker

Posted

I read about the 30 day policy today at the library. I'm hoping thats what they opted for, I mean, its been 5 years! I'll have to check. Thank you!

Posted

Something is not right here.. who is selling the condo? the HOA or old owner? If the old owner wants to sell it the owner can sell it immediately subject to the lien and pay the lien from the proceeds. If the HOA is selling it the old owner should not be involved -- they have already foreclosed and own the unit.

Now if you put the offer into the HOA and the HOA owned it subject to some right of reversion to the old owner.. then all should be well also. Now that the Lien is "settled" the amount is liquidated, i.e. a sum certain. Therefore, you could buy it now and the HOA and the owner split the proceeds according to that understanding.

I would advise making an offer giving the owner a 2-3 day right to accept the offer and closing cash within a 30 day window. If they do not accept they may be waiting for other offers ... and your patience is working against you.

Answering this question with general knowlege of the law does not create an attorney client relationship and attorney cannot be held responsible for how the questioner uses this information.

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8 comments

Asker

Posted

The home is owned by Freddie Mac. When I called this morning they said that they wouldn't look at any offers, cash or otherwise until the condo was released back on to the market. The condo won't be put back on the market until the settlement is paid.

James T. Weiner

James T. Weiner

Posted

I thought something was "hinky"-- a mortgage foreclosure. That is Freddie Mac's internal policies have no relation to law so ... this ends up not being a legal question. There is still some unanswered questions: The old owner is the old legal fee owner and not the mortgage company.. and the old owner owes the lien settlement? With that assummption since the old owner's interest was forclosed upon (apparently) I would not hold out on quick payment.. if the old owner could not pay the mortgage.. I would not assume the settlement would be paid quickly..

Asker

Posted

Yes, the old owner owes the settlement and has to pay. So I guess the question becomes would they really keep the condo off the market while waiting for a settlement. (it doesnt make sense to me, because in the mean time they would be collecting association fees from the new owner...) Do I have any options as far as bypassing the settlement issue?

James T. Weiner

James T. Weiner

Posted

The issue is most likely that FM cannot give you clear title until the settlement is paid and the lien goes away. Most likely FM will not agree to put part of its proceeds aside to cover the lien -- so you would have to assume the risk that the old owner would pay. that would mean paying the settlement yourself -- a risk of $18K if the old owner does not pay.

Asker

Posted

I just dug up the "Dissolution of Association Lien" though a very helpful woman at the Register of Deeds in Oakland County. This is what FM told me they were waiting for. It was filed almost a month ago and they claim they didn't receive notification. End of document also says "Dis of Lis Pendens". Does that mean its over?

James T. Weiner

James T. Weiner

Posted

Yes. it Discharges the Lis Pendens and Discharges the Association Lien so the bank should be able to get clear title now..

James T. Weiner

James T. Weiner

Posted

Make sure that your contact at FM and the title insurance company gets copies!!

Asker

Posted

Now FM wont release the home because "its not the right document" Good grief! Does it ever end?

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