- This topic has 9 replies, 6 voices, and was last updated 17 years, 4 months ago by
DaCounselor.
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October 7, 2007 at 10:15 AM #10520October 7, 2007 at 10:49 AM #87239
Arty
ParticipantTechnically, the past due HOA fees aren’t a lien correct? Does the past due balance get eliminated? Even if it does, many of the downtown condos have HOAs are $400, $500, $600 or more each month.
Wow, any lawyer here. As far as I know, the HOA can apply the lien anytime as long as is on its book. So I think most HOA will wait until someone brought it or apply the lien after foreclosure. I don’t know about California law, however, the HOA has to supply a copy of resale agreement outlining if there is any problems with the unit (i.e. over due HOA fee) in Washington state. This is not a legal advice!
October 7, 2007 at 11:16 AM #87241Ex-SD
ParticipantI am NOT an attorney. Just my opinion.
I think that the unpaid HOA fees will continue to accrue for each month that they have not been paid until the unit is sold. At closing, the outstanding HOA fees must be paid from the proceeds of the sale or escrow cannot close.
October 7, 2007 at 12:09 PM #87244davelj
ParticipantEx-SD has it right. The unpaid HOA fees accrue until the unit is sold. Once the unit is sold, the unpaid HOA fees are paid to the HOA. The lender keeps the rest (assuming there’s no equity left). The problem for HOAs, though, is that this is a long process. In addition, the HOA’s management company is going to charge additional fees to keep track of this stuff.
October 7, 2007 at 12:14 PM #87245DaCounselor
ParticipantInteresting niche issue, nsr.
If the HOA has filed a lien for unpaid dues (in excess of $1800 as you point out) it would indeed be cleared out by a superior lienholder (1st or 2nd mtg, for instance) foreclosing. The HOA could keep those in a superior position current and foreclose itself, but in today’s environment that probably wouldn’t make sense as I suppose most of the properties at issue may be under water.
If the HOA lien is wiped out, the HOA can still pursue payment from the former homeowner via legal action. Just because the HOA lien is wiped out doesn’t mean the obligation goes away.
Once the lender becomes the owner, they are obligated to pay HOA dues. If they do not, they property would once again be subject to an HOA lien ($1800 plus), HOA foreclosure and/or legal action against the lender for payment of dues.
October 7, 2007 at 8:51 PM #87267Mr_Brightside
ParticipantA friend of mine is a recently elected HOA president, this topic came up over drinks one night. He thought that they get their money while I didn’t think that was the case. My view was the HOA fee is more like a cable bill and is the problem of the underwater owner not the bank that holds the first mortgage.
I’m still not completely convinced myself although DaCounselor seems to know what he’s talking about.
Are there any more references to actual case or anything specific?
I think this is an important issue in our current market.
October 10, 2007 at 2:06 PM #87874davelj
ParticipantBrightside, DaCounselor, et al…
I spoke with the head of my building’s HOA about this (he was also the building’s developer) and he said (I’m paraphrasing):
“In all but the most unusual cases – that is, situations where there might be an issue with the CC&Rs or the property’s title insurance – the institution that forecloses on the property must pay the accrued unpaid HOA dues or else they will not be able to legally transfer the title of the property to a new owner.”
A friend of mine who’s the CEO of a local bank said the same thing in so many words.
Now, they may be wrong; laws may have changed; or whatever else, but the impression I get – and there’s a certain logic to it – is that the owner of the property (whether it’s the original owner or a financial institution) must cure any issues with unpaid HOA dues before legal title will transfer to a new owner. Having said that, maybe the law varies to some degree depending on the circumstances. I’m just reporting what I’ve been told by people who should know about such things.
October 10, 2007 at 2:06 PM #87878davelj
ParticipantBrightside, DaCounselor, et al…
I spoke with the head of my building’s HOA about this (he was also the building’s developer) and he said (I’m paraphrasing):
“In all but the most unusual cases – that is, situations where there might be an issue with the CC&Rs or the property’s title insurance – the institution that forecloses on the property must pay the accrued unpaid HOA dues or else they will not be able to legally transfer the title of the property to a new owner.”
A friend of mine who’s the CEO of a local bank said the same thing in so many words.
Now, they may be wrong; laws may have changed; or whatever else, but the impression I get – and there’s a certain logic to it – is that the owner of the property (whether it’s the original owner or a financial institution) must cure any issues with unpaid HOA dues before legal title will transfer to a new owner. Having said that, maybe the law varies to some degree depending on the circumstances. I’m just reporting what I’ve been told by people who should know about such things.
October 10, 2007 at 3:19 PM #87884DaCounselor
Participantsounds right, davelj. the bottom line is that the HOA is going to get paid. they certainly can chase the foreclosed homeowner for pre-foreclosure dues, but it sounds like the HOA more typically sits back and waits to ultimately get paid by the lender.
October 10, 2007 at 3:19 PM #87889DaCounselor
Participantsounds right, davelj. the bottom line is that the HOA is going to get paid. they certainly can chase the foreclosed homeowner for pre-foreclosure dues, but it sounds like the HOA more typically sits back and waits to ultimately get paid by the lender.
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