If a HOA files a lien and is awarded the property in an auction, what happens to the first mortgage holder?

Asked over 4 years ago - Lake Worth, FL

Are investors purchasing properties at HOA lien auctions to flip the property? How would they make money if there is a first mortgage (in the foreclosure process). Are they still responsible to the first mortgage holder or does that remain the liability of the original mortgage holds?

Attorney answers (1)

  1. Steven Alan Fink

    Contributor Level 20

    Answered . The mortgage serves as a lien on the property. When the HOA forecloses on the property, the mortgage is still there. The HOA as the new owner of the property is responsible for paying the mortgage or they can lose the house in foreclosure.

    If you buy theproperty at auction, you are still subject to the mortgage and any other unpaid liens on the property that were placed there ahead of the HOA lien.

    You make money as an investor if there is any equity in the property over and above the existing liens.

    The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the State of California. Responses are based solely on California law unless stated otherwise.

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