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How can a condo association foreclose on a property when the bank owns the mortgage on it?

Aventura, FL |

I see the county auctioning condo properties, both for condo associations and banks. I understand a bank foreclosing on the property. How is it that an association (bank is not included on the final judgement)can do this? What happens to the bank's interest in the matter? Is this a scheme facilitated by the county where the condo gets their fees paid and then after the buyer has paid for the deed at auction, the bank steps in and forecloses on an overpriced previous mortgage? Doesn't this just recycle an already glutted market, or is there some protection for the new buyer?

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Attorney answers 3


No protection for the buyer. You summed it up nicely. It's a problem for unsuspecting buyers.

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. The Law Offices of Stage & Associates practices state-wide and represents homeowners and community associations. Please visit our website at


The association can foreclose pursuant to a claim of lien for dues owed them. If successful on the foreclosure the mortgage doesn't go away but remains on the property but you must leave.


As noted previously, the condominium remains incumbered by the lender(s) lien(s). However, despite recent efforts of institutional lenders to streamline the foreclosure process, a tremendous backlog remains in many parts of Florida. And therein lies the "protection" for a buyer that has conducted its due diligence... Assume, for discussion purposes, that: (i) condominium units in a particular community are presently renting for $3000 per month and selling for $500,000; and (ii) the average duration for foreclosure proceedings in the county where the condominium is located is currently 1 year. If the condominium association forecloses on a unit for unpaid assessments and subsequently conveys title (subject to the lender's first priority lien) for $12,000 (not an unreasonable figures for a certificate of title under these circumstances), by amortizing its purchase price for the anticipated time frame for completion of foreclosure, the buyer will be able to reside in the unit "rent-free" for a period of 8 months. Again, this is just an example with simple numbers to make the analogy easy to follow, but I'm seeing similar fact patterns with greater frequency.

The attorney providing the response above works at Fox Rothschild LLP. The information and comments posted on this website do not constitute legal advice. No attorney-client relationship has been or will be formed by any communication(s) to, from or with the attorney. For legal advice, contact an attorney at Fox Rothschild LLP or an attorney actively practicing in your jurisdiction. Do not send any confidential or privileged information to the attorney; neither Fox Rothschild nor the attorney will assume any liability or responsibility for it.

Peter Lowrance Blacklock

Peter Lowrance Blacklock


Sorry - "encumbered," not "incumbered"



I am very confused here. Isn;t it that if the condo association forecloses for unpaid dues, they become the owners and by way of foreclosure remove the lien. I thought that now the bank can only try to recover the money from the original borrower, but have no collateral since the foreclosure sale.

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