Home Buying in 92130>Question Details

Matt7102, Home Buyer in 92130

Are we responsible for previous owner not paying HOA dues not specified at time of signing?

Asked by Matt7102, 92130 Fri Aug 3, 2012

My wife and I purchased a house on January 27 2012. We and the seller signed an affidavit stating that there were no outstanding HOA dues due. We received a letter in April stating that we owed money to the HOA dating back to 2010. I called the HOA and explained the situation and asked what we owed since we moved in. We paid what was owed for the 2012 years plus a transfer fee. I thought this was enough, however, we just received a letter suing us for the balance on the account. We are first time home buyers and did not know of or provided with a a certificate of HOA fees from an escrow company. I hear that one of these MUST be provided at the time of signing if the house resides in an HOA. If there were outstanding fees, how were they able to sell the house? Why did our title company, and both real estate companies not know of unpaid fees? Why was it stated on the affidavit that there was a homeowners association, but the line that asked "the name of the HOA" was blank?

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Maria Rosino-Miracco’s answer
Matt-

This is my opinion. The seller is responsible to pay the back HOA dues, and if they failed to, the new owner is NOT responsible. The HOA has legal recourse to go after the prior owner for any dues assessments that occurred when that person/persons owned the property. NOTE HOWEVER, it all depends on what the purchase contract says. The standard purchase agreement says seller is responsible to pay the HOA dues current at the time of closing (as well as any delinquent property taxes or other liens) and that title will pass free and clear to you, the buyer.

If you received a title insurance policy at the time of the purchase, which you would HAVE TO if the purchase was financed, then the title insurance company or your lender for that matter would not have let the sale close without the delinquent HOA dues (including late fees, etc.) being paid off in full at the time of the closing.

Look through your escrow documents for the title insurance policy, and I would contact that company to find out what the heck happened.

Your purchase agreement should have contained verbiage stating that title would be passed free and clear to you and that HOA dues and property taxes would be PRORATED TO THE CLOSE OF ESCROW. If the seller failed to pay a delinquent amount, they may have been in breach of the contract, unless the seller's addendums contained language to negate the seller's responsibility to pay these items current as of the closing date.

You can start with contacting escrow and the title company to find out who screwed up, but if the HOA is dead set on pursuing you for unpaid HOA dues, you want to deal with this head-on ASAP. I would definitely call them first and let them know you are the new owner. You may need to retain counsel if you don't get anywhere.

Maria Rosino-Miracco, CEO
Maxum Realty, Inc.
877-490-5697
maria@maxumrealty.com
CA DRE# 01831224
CA State Bar # 205544
0 votes Thank Flag Link Tue Aug 7, 2012
Contact the title company that perform the closing on this property. They are responsable to give you a clear title, unless that you stipulates in the sales contract otherwise. New owners should not be hold responsable for previousowner's HOA fees.

Best of Luck,

Maria Cipollone

Century 21 Tenace

http://www.Flahomespecialist.com
1 vote Thank Flag Link Mon Oct 15, 2012
Every time I have heard of this coming up, the Buyer got screwed.
The HOA didn't file a Lien, so the Title Company wasn't aware; there was no way of them knowing: So you can't go after the Title Company.

The HOA apparently lied; they will do that.
And the Seller either lied or had their head in an anal position, (I would opt for door 1).

Either way, you are probably in a LEGAL situation, (know what I mean?)

Good luck and may God bless
1 vote Thank Flag Link Fri Aug 3, 2012
Matt,
Contact the HOA and be sure they are tying to sue you first and not the old owner.
If so contact the title and escrow company and ask for their help.
See if there is a lien on the property from the HOA.
if that doesn't appear to go well quickly contact a real estate attorney.
then make sure there is no lien on the property from the HOA.

Harold Sharpe - Broker
So Cal Homes
(951) 821-8211
harold@socalhomes.biz
http://www.socalhomes.biz
California Department of Real Estate Broker License # 01312992
0 votes Thank Flag Link Sat Aug 4, 2012
Dear Matt7102:
I see by your zip code that you are in San Diego County and, for the purpose of answering this question, I'll assume you used the California Residential Purchase Agreement for your purchase. On page 5, paragraph 17 it clearly states that, among other things, the HOA fees shall be "PAID CURRENT" prior to the close of escrow. If your closing date was in the middle of the month, then the HOA fee would be prorated between seller and buyer. Escrow is the one that handles money coming in and money going out during the escrow period. They should have communicated with the HOA on this matter to ensure all dues were paid current. If the former owner was in default on their HOA dues, this should have been brought to your attention prior to closing. I know the bankruptcy court considers delinquent HOA dues a personal debt and the remedy is for the HOA to pursue this debt in collections. You said you received a letter suing you. Was this letter from the HOA or an attorney? Based on the Purchase Agreement language, my guess is that someone is using heavy-handed tactics to see if they can get the money from you. I suggest you contact the agent that represented you in the purchase and have them put together a letter stating your position and send it to the party that sent the letter. If that agent is unavailable, then talk to the broker of record. I recommend that you do not let this go on for much longer and create a bigger problem for you which may affect your credit. Good Luck!
0 votes Thank Flag Link Sat Aug 4, 2012
In California, the HOA has the legal right to pursue the previous owners. However, realistically they are going to pursue funds from anyone who they think they can get the $$$$ from. Unfortunately, you are probably going to need legal assistance. Of course, weigh out the cost of attorney versus cost to clear the HOA fees......paying an attorney a bunch of money AND possibly needing to pay the fees would be really unfortunate. I am in no way suggesting you decide one way or the other...just food for thought.
0 votes Thank Flag Link Fri Aug 3, 2012
Contact an attorney ASAP. Good Luck. The HOA back dues should have been revealed in the Title search and you final HUD will show what you have paid.
0 votes Thank Flag Link Fri Aug 3, 2012
And why didn't your Lender require this information.

You will want to contact an attorney. My guess is that the escrow company is not responsible for collecting these fees unless the HOA requests this or has placed a lien on the property. The real estate agents . . . kind of obliged to verify that the basic terms of the Purchase & Sale Agreement are completed, so the Listing Agent would have to demonstrate that they delivered the required HOA documents and your agent would have to demonstrate that they passed them on to you. The Lender absolutely would have wanted to know about this.

Basically, the new owner is on the hook for six months of unpaid HOA dues. The old owner? The HOA has to file a judgement against for anything in excess of that.

Get an attorney, they'll get you through this.

All the best,
0 votes Thank Flag Link Fri Aug 3, 2012
Every HOA is different. Get all the HOA information and seek a legal opinion.
0 votes Thank Flag Link Fri Aug 3, 2012
Every HOA is different. Get all the HOA information and seek a legal opinion.
0 votes Thank Flag Link Fri Aug 3, 2012
I think you absolutely have to get the two agents involved that sold the home, and if they are unwilling, their brokers. Per your explanation, it certainly sounds like something was mishandled and that would be my first recourse. If that doesn't get results, then I would suggest you speak with a real estate attorney.

Good luck. I hate to hear of stuff like this happening.
0 votes Thank Flag Link Fri Aug 3, 2012
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