HOAs are foreclosing homes in Florida. Are they responsible for the mortgage(s) if they buy the home at the auction?

Asked by Jennifer, Michigan Mon Jan 23, 2012

HOA liens are junior to the mortgage liens. If a "3rd party" (investor) buys the home at the county auction, then the buyer will be responsible for paying the balance of the mortgages. Hence, very few investors will want to buy these foreclosed homes at the auction, except if they can buy them for $10-20K.

If nobody bids on the home at the auction, then I assume that the HOA (which is the Plaintiff) will bid and buy the home. If they do this, wouldn't they be on the hook to pay the mortgages? If so, why would the HOA take the risk of foreclosing the home and end up owning it and be responsible for paying the mortgage? Do they re-sell them through a real estate agent and hopefully pass the responsibility of the mortgage to another buyer?

Or, in the scenario where nobody bids on the home, does the HOA let the mortgage lender (bank) bid the minimum amount so that the bank will eventually own the home? In this case, the HOA will be able to start collecting dues from the bank?

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3
Alma Kee, Agent, Tampa, FL
Tue Jan 24, 2012
BEST ANSWER
Forgot to answer your last question... No, the lender lets the HOA foreclose and take ownership if there is not an investor willing to pay the amount required at the courthouse to payoff the HOA lien. The HOA can attempt to do a deed in lieu to "give" the property to the lender but truly the HOA would be better off renting out the property if no investor wants it at the courthouse to recoup their $2k+ attorney fees and back due HOA assessments. Of course the HOA needs to fully disclose to the tenant that they may have to move as soon as 90 days.

The HOA doesn't have to pay the first mortgage off, eventually the lender will foreclose and take back the house but the original debt isn't an obligation of the HOA. It's a lien attached to the property.
2 votes
What happens when the Investor wins the bid for the HOA foreclosed property? Does the Investor have the same ability to rent out the property until the Mortgage co forecloses or will there be a lien preventing the investor from obtaining the title until the mortgage co is satisfied?
Flag Tue Jul 3, 2012
Alma Kee, Agent, Tampa, FL
Tue Jan 24, 2012
Realtor Mott is correct in that the first mortgage "sticks" along with IRS liens, code enforcement liens, water liens, etc.

HOAs and Condo Assns are rushing to the courthouse to foreclose because it may make sense if the lien is not too high an investor will buy it at the courthouse so they can immediately rent it out. This all depends on how far into the foreclosure process the first mortgage is. You see our FL foreclosure system is absurdly slow so it can easily be 2 years before the 1st mortgage lender eventually forecloses on either the investor that purchased the house (subject to all liens) at the courthouse auction or the HOA/Condo Assn.

This is a great way for an HOA/Condo Assn to immediately get paid for past due assessments. Should the first lender foreclose, Florida law puts a limit on how much in HOA fees the association can get so with investors lined up at the courthouse buying the HOA/Condo assn foreclosures the association can get their back due fees and attorney fees immediately.

There is also a fairly recent law that allows an association to collect rents from a tenant renting a unit when the landlord is not current with his fees and some associations are taking that route, too.

Here's an interesting website about living in a Condo or HOA Assn:

http://www.ccfj.net

All the best,
Alma
Alma Rose Kee PA
Future Home Realty
813.244.9898
http://www.SoldOnTampa.com
2 votes
Mott Marvin…, Agent, Sunny Isles Beach, FL
Mon Jan 23, 2012
Certainly-

HOA's and Condominium Association are responsible for the mortgage. Often when the Association forecloses- they opt to rent the unit to cover the the past due and recurring monthly dues along with any special assessments. Yes, the units are typically placed on the market with a brokerage and sold.

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2 votes
What happens when the Investor wins the bid for the HOA foreclosed property? Does the Investor have the same ability to rent out the property until the Mortgage co forecloses or will there be a lien preventing the investor from obtaining the title until the mortgage co is satisfied?
Flag Tue Jul 3, 2012
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