Bank puts up a property for auction that has the owner listed as the HOA


#1

What happens when a bank forecloses and puts up a property for auction that has the owner listed as the HOA?? Then I buy this property at the auction - are there going to be title issues?? The foreclosure auction was instigated by the bank and was a loan taken out by the person who bought the condo originally.? The HOA took over the property 2 months prior to the NTS and the HOA evicted the condo owner (loan holder). I am concerned about title, gaining possession from the HOA, and if I would be responsible for the back HOA dues that are owed.? I was thinking that I wouldn’t be since the primary loan would be in first position and the HOA fees would be a lien under that.? I know that buying property that is being offered by the HOA up for auction is a bad deal - but this is a different scenario.

And I have also been told that there is a pending short sale on the property and that the HOA is the one selling the property - not sure if that has any bearing on this whole deal or not.


#2

I’ve purchased HOA foreclosures before, and they aren’t necessarily a bad deal, just a bit of a gamble because the homeowner has the right of redemption for 90 days, so you have the risk of being out money for nothing in return. As for the HOA owning the property, I don’t see how that would have any impact on the first foreclosing. If anything it sounds like a benefit since they already evicted the owner for you. As for being responsible for back dues, the HOA already “collected” when they foreclosed, plus it sounds like any HOA back dues at this point would be junior to the foreclosing loan so they would be wiped out. I always recommend running these unusual situations by your title officer or attorney (I’m not either), and I haven’t reviewed the specifics of the property, but from your outline above it sure seems ok.


#3

Delinquent HOA dues are definitely junior to the foreclosing lender. That was determined in the "“me” v. Household Finance Case 10 some years ago. A published case.