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Lake Wales, FL |

I bought a property on a court HOA foreclosure auction, and now the bank wants to foreclose that same property because of a mortgage.
The HOA NOTICE OF LIS PENDENS was sent to the Bank with both defendants during the case of HOA foreclosure, but the bank did not show interest of oppose the foreclosure.
Is that a good defense to request a dismissal of the Bank Foreclosure now?
The bank is saying they weren't informed about the HOA foreclosure auction, but I have a proof they were served and the NOTICE OF LIS PENDENS shows the Bank name and their address.

Attorney Answers 3

  1. Assuming "the bank" has a lien that is superior to the lien that the HOA foreclosed, which is normally the case, the Bank had no obligation to oppose the foreclosure, and none of that is a basis to obtain a dismissal of the mortgage foreclosure.

    People who buy at association foreclosures are taking an enormous risk, and unless they really understand what they are getting into, they need a full title examination and guidance form a real estate litigation attorney, because superior lien holders, such as first mortgagees, do have the right to foreclose, even when the association has already done so. This is a problem people are encountering in great numbers - an association foreclosure normally DOES NOT dispose of the mortgage or of the rights of the mortgage creditor.

    Please seek the advice of knowledgable counsel.

    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.

  2. Ms. Golant is correct that the holder of a first mortgage has a lien that is superior to the lien of the HOA/COA.

    That means that the HOA/COA can not do anything in its foreclosure that would affect the interests of the first mortgage holder. Therefore, the first mortgage holder does not have to be sued, or given any notice at all, as to the HOA/COA foreclosure. The fact that the mortgage holder had knowledge of the HOA/COA case has absolutely no bearing on its right to then foreclose on its mortgage.

    I hope you found this response to be of assistance. This response shall not be considered the rendering of legal advise but instead a general response to a general question. While Avvo is a wonderful resource, nothing can be a substitute for an in-depth consultation with an attorney in the jurisdiction in which the law is to be applied. This response shall not be deemed to create an attorney-client relationship, nor shall it create an obligation on the part of the attorney to respond to further inquiry from the questioner.

  3. I will add one comment to the excellent answers by Atty Golant and Atty Lampert. The priority/superiority of the lender's claim on the property only applies if you are talking about the "First Mortgage". As you might know, many people over the last 10 years bought homes 100% financed (or more). They typically took out a "First Mortgage" for 80% of the purchase price and a "Second Mortgage" or a "Line of Credit" for the remaining 20%.

    It is more complicated that what I will say, but basically the priority of liens is a first come-first served deal. File your lien first, and you have the highest priority in foreclosures. Priority is important because anybody who forecloses his/her lien can ONLY extinguish the rights of those liens that are LOWER priority (usually meaning filed at a later date). The Florida statutes give the HOA a "Super Priority" leapfrogging over all those liens regardless of when filed, except for a couple of exceptions. One of those exceptions is the First Mortgage that the owner got when he/she purchased the property. The First Mortgage, you could say, has a "Super Super Priority".

    It is most likely that you are dealing with a First Mortgagee Lender that has a superior lien to the one you bought, in which case the only defense is paying the loan.