You have received some good answers below and also some bad information. I am not an attorney. Because of that, when one of my clients was running afoul of their HOA for non-payment of HOA fees during a short-sale, we contacted an attorney. I will share what we were told. Please, however, remember that the information we received was based on our scenario and was regarding a property in the State of California, and therefore your situation may have legal ramifications that were not covered in our scenario.
Per the attorney: HOA fees are NOT the same as a mortgage against your property. They are a personal liability and the law allows the HOA to file a civil case against you for the collection of these monies, including penalties, interest, and costs. The HOA does have the right to place a lien against your property, which in a normal sale would result in them getting paid. However, in a foreclosure, that lien would be wiped out and the HOA's only recourse would be against the prior owner through a lawsuit. In the early days, the lenders, in a short sale would pay the HOA liens so the seller could sell free and clear of liens. In today's world, this must be negotiated and that negotiation is NOT always successful. Often, the new buyer ends up paying to have the HOA lien removed.
Your decision to continue paying the HOA dues, until you are no longer on title, will keep you out of court with your HOA. It will also prevent them from making any negative reports to the credit bureaus.
As others have suggested, you might want to consider doing a short sale. New laws protect you from owing any deficiencies on both 1st and subjordinate liens in an approved short sale. If you have more than one loan on the house, you might end up being sued by the junior notes after the 1st forecloses on your property. We are seeing more and more of this today. If you want to discuss your options, please feel free to contact me.
Dare to Dream.
Shel-lee Davis, QSCÂ®
Certified Distressed Property Expert â€“ CDPEÂ®
Short Sale & Foreclosure Resource â€“ SFRÂ®
Certified HAFA Specialist â€“ CHSÂ®
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty
The bank will require HOA bank account info for deposits. Make sure you have correct HOA contact phone & fax #'s to give the bank. They will contact HOA for their bank acct info for transfer of funds, etc..
You could take it one step further:
Have the bank's lawyer or another, produce a legal document holding the lender accountable to the HOA association for change of status to property because HOA is responsiblefor withdrawals from escrow account.
This will take the burden off your shoulders and legally put it on them....
It doesn't cost anything to set up an escrow account, but it might/will cost a few dollars for legal document & expertise.
Keep sufficient funds in escrow account!!!
First off, where are you in the foreclosure process? Many of the banks have postponed foreclosures due to the Making Home Affordable Plan and having to do outreach to delinquent homeowners to attempt to resolve their delinquencies by offering a loan modification or payment plan of some kind.
You need to know that you have options. If you walk away from your condo, the bank may not take it back/foreclose for several months. You will still be responsible for the HOA dues until that occurs and collection efforts by the HOA may continue. I suggest being in communication with your mortgage lender and let them know what your intent is.
Your options are as follows:
1. To attempt a loan modification or payment plan to bring your mortgage current.
2. Short Sale your property and apply for a HAFA Short Sale.
3. Contact your mortgage lender and see if they will do a Deed in Lieu of Foreclosure, this is where you just give the property back to the bank.
4. Wait for the foreclosure to occur.
Keep in mind that even if you move out of the unit, you are still the owner until the foreclosure takes place and the bank is the owner. You may want to consider renting out the unit and using the funds to pay the HOA, insurance and maintenance of the unit. One more option. OR...just stay in the property until the foreclosure occurs. You are still the owner.
And...you can consult with an attorney as well to make sure your rights are protected. This is a sticky situation for many across the United States now...you are not alone!
If I may be of further assistance, please feel free to contact me directly.
All the best,
Kat Becker, Agent
Prudential California Realty
I have seen the HOA's operate separate from the Forclosure:
Meaning, the Forclosure will not stop the debt and they will probably pursue YOU and not the Lien.
I would bet that they will bill YOU at least until the Foreclosure, (They can't sue a HOUSE, and I would bet they wouldn't try to sue the Bank; so who does that leave?)
If you need a Buyer to Short sale Contact me
Sara Mehrpouyan CDPE
Short Sale & Foreclosure Specialist
Dre License #01712757
You should do a short sale and negotiate for the buyer to pay the HOA fees... we do that all the time...
Call our office and ask to speak to Michael Smith.. he is our in -house attorney and he can answer all your legal questions... (310) 736 1449... and my staff can assist you with the short sale...
Consider your options and do what is best for you... always minimize any potential future negative consequences... be sure to be informed so you can decide what is best for you... you may be tired of trying the make the bank come to their senses, but you can find a short sale expert to help you and take the pain away from you, for no charge because the bank pays our commission...
Interview a couple of agents, make sure they have actual short sale closed deals in the last 6 months and ask for testimonials from their clients... see what kind of support staff they have and try to gauge if they have YOUR best interest at heart.
Best of luck!
You can do a short sale and keep foreclosure off your credit. Why let the property go to foreclosure? Feel free to give us a call, and we can explain the process to you.
Eli Givoni, Director
Short Sale Department, LLC
Serving all 50 states
MARS Disclosure for General Commercial Communications
Short Sale Department, LLC is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit.
This is a very important questions to consult with an attorney. There are important issues to read about your loan and status of the HOA. Please consult with an Attorney now so you don't regret later. I assume you tried short selling it? If not, that may be an option to consider. Good luck!