happens in the following foreclosure example concerning past due HOA dues:
* Condo owner has a 1st mortgage of $350,000 and is current on their payments.
* Homeowner is behind in their HOA dues and refuses to pay claiming they do not have the money.
* Amount has been overdue for 24 months and the amount is $12,000
* HOA has filed a lien and done all of the paperwork to foreclose.
* HOA executes a non-judicial foreclosure for the $12,000 unpaid debt.
* The HOA takes title to the property.
* Time has expired for the Condo owner to re-claim their property from foreclosure by the HOA. The Condo owner has moved out of the property.
What happens to the 1st mortgage holder?
How do they get their money which was secured by the 1st mortgage?
Can the HOA sell the property for any price?
Who has a claim on the proceeds which exceed the $12,000 debt?
Answer:Â Based on what you have stated the HOA now owns the property. Â Provided this was a typical HOA, the Deed of Trust is still attached to the property. Â If the HOA wanted to sell the property the loans would need to be paid off. Â If they do not make arrangements with the lender for payment or payoff, Â then the lender can start the foreclosure process. Â If the lender forecloses then the HOA would be wiped out.
When a homeowner has not paid their homeowner association dues the HOA could absolutely take ownership of a property through the non-judicial foreclosure process subject to any senior liens recorded against the property. Â Â The HOA would first need to file a lien for the past due assessments and then foreclose on that lien position by filing a Notice of Default and a corresponding Notice of Trustee Sale. Â Providing that a 3rd party investor did not purchase the property at trustee sale, the HOA would then own the property. Â Â At that point they could payoff the existing senior loans, rent or sell the property. Â If they are not making the mortgage payments then it would be a matter of time before the lender would foreclose and wipe out their ownership interest. Â
It would be wise for a HOA to consult with an attorney before proceeding with a foreclosure on a member of their association. Â Keep in mind that the HOA could end up like so many owners of investment property where they rent out a property and a Notice of Default is filed and the renter stops paying rent. Â The non judicial foreclosure process in CA can take as little as 111 days from the filing of the Notice of Default to the Trustee Sale.
There are many variables involved with any foreclosure action.Â Each case is different in its own right.Â You are strongly encouraged to seek legal advice from a real estate attorney specializing in foreclosure actions.Â The information provided herein has been taken from a reliable source but is not guaranteed.Â Please consult with the appropriate professional properly certified to provide accurate and reliable advice prior to making any decisions on your own.A HOA can foreclose on a property just like a lender. You would get the trustees deed like any other sale and as long as it was recorded within 15 days of the sale it would be effective the date of the trustee sale. The big difference with a foreclosure on a HOA lien is that there is a 90 day Right of Redemption in CA. Although you could give the appropriate notice to the occupant to take possession or start the eviction process most investors would tell you to wait until the 90 days are up before you push the issue. If the property is vacant you would be able to take immediate possession of the property like any other sale. YOu can read more about the CA foreclosure laws by going to http://www.foreclosureradar.com/ca-foreclosure-law