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Dagmar Mouri…, Real Estate Pro in Chandler, AZ

How do I handle a HOA lien in a AZ Short Sale?

Asked by Dagmar Mouritsen, Chandler, AZ Fri Sep 17, 2010

I'm a listing gent doing a Short Sale in Arizona with Bank of America. I would appreciate to hear experiences and advice from other AZ agents. The seller does not have money to pay it off. It's currently $2800 and increasing every month. The State laws do matter, therefore please share your Arizona experience. Thanks much!

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In a foreclosure the HOA lien amount due would be released so you could sell the house, but the seller can be pursued personally for the $2800 by the HOA. Most HOA will seek to get a judgment and turn it over to collections if they think there is any chance of collection. So the seller will need to address this whether they go short sale or foreclosure. Only bankruptcy will get rid of the HOA obligation.

Now to your question. Because this is a short sale, you will need to negotiate with the HOA for a lesser number so they will release their lein. Most will waive late fees and only ask for the actual dues. Their motivation is they get a paying owner sooner, but if it goes to foreclosure, the bank will start paying HOA dues so offering to pay them zero is not an option. You are not in a good negotiating position. If the seller simply does not have any money to contribute, then you are stuck with asking the buyer to pay some or all the HOA bills, or use part of your commission. I doubt seriously whether B of A will contribute based on what I here from other agents.

Call the HOA and see what you can work out. Talk to the buyer's agent to see if they are willing to contribute.

I am facing the same problem with a short sale seller. I convinced the seller that he had been getting free rent for some time and now needed to dig in his pocket to make this go away.

If the seller has absolutely no money, then he may be better off to let it go to foreclosure and file bankruptcy to discharge the HOA debt. Try discussing it with them that way.

Loren
http://www.Arizona-Dream-Homes.com
1 vote Thank Flag Link Sat Sep 18, 2010
Randy is right... you may get a good answer here from someone but you need to speak to your D.B. They are going to be ultimately responsible and should be in on the decision. Often times your D.B. will have an attorney that they can talk to to guide you to a safe and secure resolution.
3 votes Thank Flag Link Fri Sep 17, 2010
Talk to your Designated Broker. Take a CDPE course. Whatever you do, do not take your counsel from public forums like Trulia!
2 votes Thank Flag Link Fri Sep 17, 2010
I am going to suggest a different forum (blog) to get good current information from active short sale sellers.
This site has a sub-blog devoted to Bank of America short sales problems and solutions.
Sign up for this blog http://shortsalesuperstars.com
I have found it quite informative.

Loren
http://www.arizona-dream-homes.com
Ready Real Estate
1 vote Thank Flag Link Sat Sep 18, 2010
I am a loan officer (Arizona) and had a similar situation.
I worked with my realtor and the HOA and first got the amount reduced. Settled and got it in writing.
My partner, buyer realtor agent, and the listing agent all put our heads together and worked through it.
Having a good lender on board that proactively helps might be the key.
Sincerely,
Celia
Web Reference: http://www.homeloandiva.com
1 vote Thank Flag Link Sat Sep 18, 2010
The lien will need to be paid prior to transfer. You will need to include this amount plus any legal fees, interest and future payments that will come do during teh process on your net sheet. you will also need to include property taxes on that as well. Once you get an offer than everything will be submitted to BOA and they will decide if they will accept the net amount that is left after paying all of this. If you have not liste dor negotiated ahsort sale, A professional negotiator will be a must for you to hire.

Please see my blog with an outline of how a short sale works and tips and advice on how to get it approved
1 vote Thank Flag Link Sat Sep 18, 2010
Hi
This is a secured lien and will be on the hud 1. If the bank bulks then maybe a settlement can be worked out with the hoa. Remember if they do not agree to something a foreclosure will wipe them out if the mortgage is a 1st. They then would get 0. Hope this helps.
1 vote Thank Flag Link Fri Sep 17, 2010
I tend to agree with Randy on this one except for the CDPE course since it gives designation of "expert" and that can put you in legal jeopardy. . The listing of short sales is very tricky and involves a lot of knowledge and skill. We often to the good people at http://www.BuyandSellSmart.com for advise. Ms. Montgomery has several hundred short sales under her belt, is one of the top short sale trainers in AZ and offers both training and consultation to agents. I'd give her a call and get the kind of advice extensive knowledge can offer. You can find her contact info on our short sale site as well: http://short-sale-phoenix.com
0 votes Thank Flag Link Sat Sep 18, 2010
In general, the buyer's agent will stipulate seller pay HOA fees as part of closing process. In general sellers or their negotiators negotiate with lien holder to pay all delinquent fees(taxes, Hoa fees etc) as part of their closing costs. Do you have an offer yet to send lien holder? I am sure buyer's agent will request the HOA fees to be paid by seller which is the lien holder. I hope your lien holder includes that in the authorization to sell.
0 votes Thank Flag Link Sat Sep 18, 2010
It is considered a secured lien and needs to be on the HUD 1. Often the HOA will agree to a set amount, but I would request that in writing
0 votes Thank Flag Link Fri Sep 17, 2010
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