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How does an HOA deal with title "won" at HOA foreclosure auction when there is a mortgage on the property?

Miami, FL |

If a buyer "wins" a property subject to mortgage at an HOA foreclosure auction, then the buyer becomes responsible for the loan and may even face foreclosure from the lender. This does not seem to deter HOA's themselves from foreclosing on properties that are subject to mortgage loans. Sometimes they are the sole or highest bidder and get a title subject to mortgage. How do *they* deal with that?

I now understand that the buyer does not become liable for the 1st mortgage but might just get wiped out of their interest in the property, should the lender foreclose on the borrower. If that buyer happens to be the HOA they will not lose their bid amount, unlike a regular buyer, but the just the fees. I guess I answered my own question, if you can confirm the above.. Then if the 1st mortgage is much less than market value, I believe there is a change for a regular buyer to get a clear title in the 10-day period after the mortgage foreclosure auction, since they are the title holder but not the borrower and can't straight out pay off the loan?

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Attorney answers 1


Yes, an HOA can foreclose on its lien but if the first mortgage is superior the HOA will be wiped out if/when the first lienor forecloses on its mortgage. If the superior lien holder will provide payoff figures, then the buyer may be able to payoff the first mortgage and then obtain clear title if there are no other liens on the property. I hope this helped to address your question.