Liens by Condo HOA's

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Submitted by buyback on April 11, 2007 - 10:42am

Our HOA is special assessing a huge amount ($25k+) for neglected repairs over the years. I am unable to pay the amount, and reluctant to borrow the money.

If I don't pay, the HOA can/will put a lien on the property for the amount. But do they have any power other than collecting the money when I re-fi or sell. Can they come after me in any other way, (other than a lawsuit, which they won't)

Submitted by Bugs on April 11, 2007 - 10:46am.

At the least, they can report the lien on your credit. They can also foreclose.

You don't want to blow this off or postpone payment for too long. All that will do will make the amount go up.

Submitted by buyback on April 11, 2007 - 10:53am.

I note they can report it, but it doesn't affect FICO scores. But can an association forclose on the unit ahead of the mortgage company?

Submitted by PerryChase on April 11, 2007 - 11:35am.

Very interesting topic.

Condos are relatively new. I wonder what will happen when to all the condos built in the 1970s. Eventually, their useful lives will expire and they'll need to be torn down.

Will owners by faced with $25k to $100k assessments?

Submitted by buyback on April 11, 2007 - 11:42am.

If the owners see to it that the boards properly fund the reserves, the moeny will be there for necessary repairs and replacements. My experience has been that they only fund the reserves to around 50% of the recommended amounts.

Then, when the roof needs replacing, they come at you for more money.

Submitted by Cow_tipping on April 11, 2007 - 11:42am.

HOA leins are junior to the mortgage. Basically if you're barely in the equity, the HOA clowns can line up and bite you, they'd lose their ass ...
If you got 150K of equity, you're screwed.
They can interrupt a sale, a refi, a transfer at death etc, but they get nothing in foreclosure. Or they are behind all the other leins on the property. Like if you're a little behind, try to get a lot behind, cash out refi now, spend like there is no tommorow and leave them with the shaft ...
Cool.
Cow_tipping.

Submitted by msnvlydweller on April 11, 2007 - 11:44am.

This doesn't answer your question, but it's possible your homeowners insurance (if you have your own policy) covers special assessments.

Submitted by buyback on April 11, 2007 - 11:59am.

Thanks, and I heard that from another owner who has Farmers Ins. I'll check it out. Certainly a great feature to have if you own a condo and I'd encourage anyone who does to make sure you have it - and watch those reserves !!

Submitted by buyback on April 11, 2007 - 12:01pm.

I LOVE the way you think.

Submitted by buyback on April 17, 2007 - 4:33pm.

A couple of things since my last post. After consulting an attorney, it appears the BOD for the Assn. incorrectly interpreted the law in counting the number of votes necessary for passage. A group of us are now involved in a 'declaratory relief' action to stop the assessment based upon this information.

Also, on the homeowners insurance covering special assessments, check with your agent, as this coverage only applies to damage or peril to units that is not covered by the association policy- like an airplane crashing into the complex. My agent of 30 years tells me that he has never seen a claim paid out for this coverage.

Submitted by chavous1 on May 20, 2009 - 3:50pm.

How do HOA's have the power to foreclose on property owned by the bank? If the homeowner is not in default with the bank, how can this occur? Who really owns the property, the bank or the HOA?

Submitted by svelte on May 20, 2009 - 5:02pm.

It's not a matter of who owns the property, it's a matter of who has the right to foreclose.

The government can foreclose on a property for failure to pay property taxes even though they don't own it, right?

If the governing documents allow for such a thing, an HOA can do the same thing for failure to pay HOA dues or fines. There are California state laws that govern how and when an HOA can do this, but in general Yes They Can!

Submitted by urbanrealtor on May 20, 2009 - 5:15pm.

chavous1 wrote:
How do HOA's have the power to foreclose on property owned by the bank? If the homeowner is not in default with the bank, how can this occur? Who really owns the property, the bank or the HOA?

Your question is a bit muddled but I will answer to what I think you are asking.

If the bank has already foreclosed and is now a homeowner themselves, they are subject to any liens just like a normal owner. Further, if they are a first mortgage (and they almost always are these days) then they own it outright and therefore have 100% equity. If they go several months without paying their HOA dues (which happens often), the HOA can file a lien or even foreclose on the owner (the bank) who is delinquent. The HOA dues are an encumbrance just like any other loan or lien. The issue from before was that if you (as an individual homeowner) have 2 loans and no equity (like most of my clients) then it would be stupid for the HOA to foreclose on you. They would foreclose just to be able to assume responsibility for a property that is upside down.

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