We are in the process of putting in an offer on a foreclosed property which has been passed from bank to bank. We have learned that there are $10,000 dollars in unpaid HOA fees. We have been assured by the agent representing the bank that the bank that is selling the property will be paying the dues or clear title cannot be given. I have read that in some states if there is a lien against a property and then it is foreclosed on, then the lien is "wiped out". I do not know if there is a lien on this propety, which is located in Florida. Can you clarify Florida Law in this situation? Thank you.
If the lien for past due assessments has been properly disposed of in the foreclosure action, it ceases to be enforceable, subject to the obligation of the foreclosing bank to make some payment to the HOA, delineated by statute. However, once the foreclosure sale is completed, the new owner who bought at the foreclosure sale and who is in most cases the foreclosing creditor, becomes responsible to pay assessments, just as any other property owner in that association. In Florida, most associations' documents provide that the association has a continuing lien for assessments against all owners, which it can then enforce by filing a
You should not try to do this without the advice of an experienced real estate attorney. The contract of sale should expressly provide that all amounts due to any third parties, including the association, and any pending special assessments, will be paid from the Seller's funds at or prior to closing.
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If the original bank that foreclosed on the property was the purchaser at the first foreclosure sale, then the past due assessments would have been limited by Florida statute 720.3085 to the lesser of 1% of the mortgage value or 12 months of past due assessments. This would have the effect of limiting what dues can be collected from the bank. If there is a remaining balance owed, then the Association must write off the remainder and not pass it on to new purchasers down the road.
The agent is correct in that the title company will not issue title insurance without a 'clear' title, which means that the past due HOA dues are paid. It is the responsibility of the current owner to bring the HOA account current. In today's economy, many banks wait until they sell the property to bring the dues up to date.
An important factor in this case will be when the bank foreclosed on the property. Florida statutes on HOA dues have changed significantly in the past 3 years and the date of the foreclosure will have an effect on the amount of past due assessments owed.
You should retain an attorney to review all the closing documents, request an account ledger from the association, and review the prior court documents to ensure that assessments are not passed on to you. There are a lot of issues to be resolved that I can't tell from your question, simply because I don't have enough facts.