In Florida, the issue of liens by a homeowner's association can be complicated. Rules are different for first mortgages, which have priority over HOA liens and seconds which do not. Associations also have the ability to foreclose on the property which you see more and more in today's market than we used to.
The latest rules have made timing a key when it comes to first mortgages having priority over HOA Liens in that effective July 1, 2008 the first mortgage will have priority as long as it was recorded prior to any lien by the association. It is also imperative that the restrictive covenants for the property are fully reviewed as they can play a role in the legality of the liens position, especially for liens in place prior to the latest statutes.
Further, there is a limit to the amount the association can collect from the primary lien holder if the foreclosure filings are properly prepared naming the HOA as a defendant. Those limits are the lesser of 12 months of association fees or 1% of the mortgage amount.
Again, this can be a complicated issue and I would certainly have your specific situation reviewed by a qualified real estate attorney. I hope this information is helpful but if you need anything additional please do not hesitate to give me a call.
Always at Your Service,
Tom Priester e-PRO
"Results Driven Real Estate"
Keller Williams Realty
We are not allowed to give legal advice as Realtoes, speak to your attorney for the best answers to these questions.
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Now, just curious why you ask. If you're planning to buy at a foreclosure auction at the courthouse brought by an HOA or Condo association you must do your homework and get legal or title company advice on which liens will survive before you bid. And... if Orlando has a "live" auction at the courthouse (like we do in Tampa), if you're the only one bidding, it's probably not a good deal!
Here's a very interesting and informative site about HOAs and Condos:
Also the State Statutes governing HOAs will prohibit certain rules in the governing documents so even if an HOA's Declaration, Articles of Incorporation or ByLaws say the HOA's lien is superior, it may violate the State Statutes. For instance the maximum an HOA can collect from the foreclosing lender is 6 months of past due HOA fees. On a condo it's 12 months. The HOA can still go after the prior owner for their loss but the new owner is not liable for more than the 6 or 12 months back due assessments. Now with that said, there are many sleazy HOA attorneys that will attempt to collect more than is legally allowable from the new owner.
Hope this helps.
Alma Rose Kee, PA
Future Home Realty