HOA Home Owner Association Foreclosure, Need Clarification
Please correct me if any of following is wrong, my understanding is:
1) HOA can record deed or lien agaist a property if the property owner does not pay his HOA dues.
2) HOA can foreclose the property if the HOA lien are not satisfied.
3) HOA liens are junior to any and all existing mortagage liens, tax liens, etc..
4) When you purchase a property at HOA foreclosure auction sale, you obtain the property subject to any and all superior liens.
5) If there is a 2nd mortgage holder and he/she wants to forclose the property, the 2nd lien holder has to pay off 1st lien holder.
My question is:
When I bid at the HOA foreclosure auction, what exactly what I am buying?
1) The lien the HOA holds against the property;
2) The title of the property along with all liens and amounts owned to mortgage lenders by the property owner.
3) All prior unpaid taxes and dues on the property;
4) What kind of liens get wiped out at HOA foreclosure?
Different states have different rules concerning the ranking of liens. You should contact an attorney in TX. You can also get good information from a title company. In most states the priority of the lien relates to the date it was filed.
In most every Foreclosure action two things happen. The FC company has there Att: search for lien position and then contact all superior liens.
The FC can not take place and hold a sale without the other liens agreement.
Even if you have a 1st mortg FC they still have to list any and all other liens in the Lis Pendes and give them opps.
That being said you would want to see at sale the FC docket, or court order for sale as well as question how they are going to convey title?
You should be able to pre-review what is going on with FC by county court records.
you should
I am truly amazed that the HOA lien would get to foreclosure status first ?!?
My dues are only $360 for the year and includes a pool. Can't imagine losing my house for not paying HOA dues...
The rules and laws vary state to state. You need to check with a TX attorney to find out, but in general:
1. The HOA records a lien against the property not a deed. The deed controls ownership, and the HOA does not have ownership interest.
2. Generally, the HOA can foreclose, but why? The cost is normally greater than most HOAs are willing to pay. (at least in my neck of the woods)
3. In general this is correct, but check with your attorney.
4. You are purchasing the right to collect the lien plus interest and costs (check with your attorney as to what you can legally collect). You are not purchasing the property.
5. Correct, or the 2nd mortgagee can also attempt a short sale.
6. This may be different in TX, so check with your attorney, but you are buying the lien. You are not buying the title, deed, or ownership interest. If you go to foreclosure, you are then attempting to gain ownership of the property, and at that point all superior liens would take precidence at the sale, and you still might not get what you are looking for. I would imagine that nothing gets wiped out at a HOA foreclusure.[ Edited by bnorton on Date 09/07/2004 ]
A few good points came out on why a HOA would Foreclose. Example of one from last month would be.
1. Buyer retired sold his house moved and payed cash for Condo.
2. Buyer died and had no children
3. under a normal dwelling the property taxes would autherise the state to come in but under the HOA they had the intrest to FC and sell.
This is only one reason we have seen them come over.
all four of your questions are good ones and the bad part is the answer is yes and no to every one. There are so many diffrent actions that take place on the foreclosure that any number of the above questions could happen. My point being you need to do your home work on each one you look to bid on. See the court docket on / who filed/ who was included/ and how are they taking the property for sale.
It is a vary case by case deal, there is no one simple answer