I am the president of a homeowners association that foreclosed and sold a
property at auction. The property had a first mortgage against it when the
HOA foreclosed. The buyer, a “green” bidder, won the bidding without, he
claims, being aware that there is a senior lien on the property and is now
subject to that lien. He later argued that he was unaware of this senior
lien and demanded that the sale be reversed and his purchase payment
returned to him. (I know, really??) The Trustee denied his request stating
the sale is final and no warranty is made as to the title on the property,
subject to all senior liens. After the 90 day redemption period for an HOA
foreclosure expired, the Trustee sent the buyer the Trustees Deed Upon Sale,
which the buyer sent back to the trustee refusing to “accept” it to record
it claiming he is NOT the owner, still wanting his money back.
My question is: Is he still the owner if he refuses to accept the deed and
record it in a timely manner? As a homeowners association, we are now
billing him for assessments, which he is also refusing to pay, claiming he
has not accepted the deed therefore is not the owner. Can a buyer at an
auction do this, claim not to be the owner? What is the legal definition of
“accepting the deed” in this case? I believe he is the owner and is
responsible to make HOA assessment payments. Thanks for your help.
The poor guy lost his money and you (HOA) collected money you never thought you would see.
Now you want him to pay HOA dues - at least until the bank forecloses and becomes the owner. That’s what we call “chutzpah”. I don’t think you can count on him throwing away money twice. If you, once again, foreclose, there is no personal liability where you can collect against him. If you sue him in Court (small claims), I doubt any Judge would award you money.
I don’t know the exact amounts, but you can’t initiate foreclosure action on HOA dues until they exceed a certain amount.
You are right, you don’t have to give him his money back.
Very interesting. Is the property vacant? Has the prior owner abandoned the property? If yes, then they are not paying the senior 1st TD. The senior 1st TD will foreclose and then someone will take ownership of that property. The HOA lien buyer will just go away, losing his money.
If he never records his deed, then the prior owner is still in legal ownership position (at least to a title company).
Thanks for this post and answers!!! I’m an investor in the Atlanta area and was thinking about bidding on a HOA foreclosure myself. And, now I think I will pass on it… On the surface, HOA foreclosure seem like a really great deal. I can see how the investor other made his mistake. I think the only way that deal could have made sense is if the remain amount on the senior lien was less than 50%. If you can find this out prior to auction…
You can always make a very rough guess as to the balance of the first. You can be sure if the lst was put on in the last 5 years, there would be no equity. And you have no way of knowing how many months (or years) it is behind.
IF YOU PLAN TO INVEST IN AN HOA PAY VERY LITTLE AND RENT THE PROPERTY IMMEDIATELY SO THAT YOU GET YOUR INITIAL INVESTMENT PLUS EXTRA MONTHLY RENTS OF OVER $1,000. /PER MONTH WITHOUT PAYING A MORTGAGE PAYMENT. MAKE CONTACT WITH LENDER AND TRY TO NEGOTIATE A SHORT SALE WHICH WILL BUY YOU TIME TO COLLECT A YEARS RENT ON YOU INITIAL INVESTMENT. THAT IS THE GAME!
Hi PowerInvest, I have not heard of anyone successfully negotiating a “short sale” after purchasing the junior HOA lien. Additionally, there is no guarantee that the lender will not pursue a foreclosure (or is in the process of foreclosing) and you cannot guarantee a year to any prospective tenant. Not to mention that most tenants, when they find out the property is in foreclosure, stop paying rent. Your “game” is a slippery slope.