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