Recently I have noticed a HOA sale in CA. The property’s FMV is around $500,000. It has first loan at $260,000 back in 2008. In May 2010, the owner failed to pay its HOA and then the trustee initiated an HOA sale at around $6,000. I know that the winner of the sale will be responsible for the senior loan which is $260,000. However, my question is if I win the HOA auction, what would be the next step to get a clean title? Can I evict the current owner first and then negotiate with the lender for paying off the $260,000 loan? I appreciate your advices. Thanks. --S.L.
You would want to check out the laws regarding HOA foreclosures by going to http://www.foreclosureradar.com/ca-foreclosure-law. On HOA liens the owner would have a 90 day redemeption period. You would probably want to wait until the 90 days has expired before you started the eviction process. During this time you would want to make sure the senior loans are not foreclosing because you could be wiped out. Once the 90 days has expired you would want to pay off the senior lien or loan to prevent them from foreclosing and then evict the occupants.
Also keep in mind that you will need to pay any past due property taxes!
Hi Michelle, Thank you very much for the explanation.
Thanks for the reply. So if the current owner exercises his 90 days redemption right, he would pay me back the amount of money I paid at the auction sale. Right? Does that include any interest rate? In addition, when can I record the trust deed, in 90 days after the auction or 15 days after the auction? The last question is about the past due property tax. What time will be the best time to pay off it, after 90 days passed or before that? Thanks.
They would have to pay you the amount that you paid at auction. I believe you may have a hard time collecting interest. The amount would be nominal so it would hardly be worth your time to collect. You would want to record the trustees deed right away. Although by law the redemption period starts from the date of the sale we have seen this issue come up with IRS liens and the title companies starting the redemption period from the recording date of the Trustees Deed. My guess is that if a homeowner was going to fight you on this issue a court would potentially side with the homeowner so I would suggest recording the Trustees Deed right way.
You would not want to pay the property taxes until after the redemption period has expired.
Hi Michelle, Thanks for your explanation which is very helpful!
A little confused by your last response, I just wanted to make sure, are you saying even after getting the CFSSR and waiting the 90 days for the TDUS, the previous owner can still try to get redemption? Or just 90 days after the sale date/CFSSR is received? Thanks in advance.
*The second question is suppossed to read…Or are they only allowed redemption within 90 days of the sale date/CFSSR is received? Sorry, and thanks again for all your help.