HOA and property tax responsibility during short sale

Asked by Hwhiteside, San Diego, CA Tue Jan 6, 2009

We are going through a short sale which has lasted over 6 months and we moved out of the home 3 months ago so that we could get into a rental (and we had a buyer lined up at that time and it fell through). We have not paid HOA dues in 3 months now. The realty company suspects the new buyer's offer will go through soon as it was approved by our loaner. 1) Are we responsible for HOA and required to pay it. If we don't, what are the repercussions. 2) Our property taxes were impounded and since we have not made payments to our lender in 6 months are we responsible and required to pay those. If not, what are the repercussions?

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Isaac Bensus…, , 92037
Sat Jan 10, 2009
I tend to agree with Scott Godzyk, your first answer. As for being taxed on the forgiven debt, I just answered another question of a short sale seller that is in a similar situation as yours. Good luck
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Keith Sorem, Agent, Glendale, CA
Wed Jan 7, 2009
You should be asking these questions to someone that knows ALL of the details of your personal situation.

Generally speaking to sell a property (transfer the title), there cannot be any liens. IMHO you need to pay the HOA fees, they are an obligation.

Property taxes, same thing. Unpaid taxes are required to be paid at transfer of title. That means that the unpaid property taxes will need to be paid by the lender (another cost they will have to incur).

Good questions, ask the person helping you with the short sale. If you need to talk with someone and need a referral to a short sale expert, I can probably help you, just contact me via my profile.

Good luck.
0 votes
Jackie, , Santo, TX
Tue Jan 6, 2009
First of all I would never recommend to anyone not to pay their obligations as that would be me encouraging someone to default on an agreement.

You shoud discuss this with the agent or broker representing you in the transaction

As long as you own the property, you are responsible for teh payment of taxes and HOA fees. If you don't pay you property taxes, they woould be in default and after a specific number of years, the tax man can foreclose. Something simnilar with HOA dues, if you don't pay them, the hOA can file a lien against the property and at some point may be able to foreclose as well. In both cases, you are probubly looking at several years for a foreclosure action.

In a Short Sale (really a short payoff) the monies to clear any back taxes or HOA dues are paid out of the deal. In that case it would not be an out of pocket cost to you. It could be possible that you might have to pay something if the bank refuses because the net on the deal is too low. That does not happen very often, usually they either accept the deal or not.

Jay Gedanken
Broker Associate
PineappleHut Realty
0 votes
Scott Godzyk, Agent, Manchester, NH
Tue Jan 6, 2009
You are technically responsible for all expenses until the time you no longer own the property. Your agent should include these expenses on the net sheet and ask the bank to pay them out of proceeds, at this point i would not pay anything if you have not in 3 months. Just make sure who ever is negotiating your short sale has negotiated that you will not be responsible for the deficiency balance between what you owe and what you are selling for. good luck with your sale.
Web Reference:  http://www.ScottSellsNH.com
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