I bought a home in CA with a Lis Pendens recorded against title and it is from the HOA for back assessments. The HOA’s attorney will not record a release and will settle for $4,000. The foreclosed loan was recorded in 2007 and the Lis Pendens was filed in Feb. 2011. I already sold the home with the title company withholding some of the proceeds until I get the Lis Pendens expunged.
Unbelievable. The law is clear, their lien came after the loan and is wiped out. I’d let the HOA attorney, and the HOA board know in writing 1) that the claim against the property has been wiped out by the foreclosure, 2) that you will apply to the court to have the lis pendens expunged, and 3) that under CA Civil Code of Procedure you will be awarded reasonable attorneys fees and costs at their expense. Better to have your attorney do this as they can cite the relevant codes. Shouldn’t be more than a couple hundred dollars to have an attorney prepare the letter, and then if necessary you can have the same attorney apply to the court to have it expunged… at the HOA’s cost.
You do NOT have to pay the HOA lien. What makes you think you do? Any title company will insure your title when you sell or borrow against the property.
This HOA lack of priority question keeps coming up here quite frequently. Even before the Court Case that confirmed this issue, loans in first position always had priority over any HOA claim.
You need to pull out the recorded CCRs for the HOA development. There is a 99% chance that the CCRs clearly state that a foreclosing lender with a 1st TD wipes out any delinquencies. Otherwise, the bank will not make a loan into the development. They have to state that in the CCRs so that lenders will provide loans to the buyers in the development.
Are you sure it is a Lis Pendens that has been recorded? Usually an HOA files a lien for delinquent assessments, not a Lis Pendens. A Lis Pendens usually requires that there is a court case pending which involves title to the property. If it is a LIEN, then it is wiped off the proeprty like any other junior lien, but it can stay recorded so that the HOA can try to go after the prior owner personally.
I had this same issue with my first condo purchase. The title company erroneously came back and insisted that the HOA remove the lien from title, but finally they realized their mistake. As long as the HOA sends a cleared account for the new owner (you) into title, everything is OK. They have to send a cleared account because their CCRs state that delinquencies are wiped out by a superior forecloslure.
Agreed GJ, but some of these HOA attorneys are out of their minds, so it doesn’t surprise me. I’ve seen so many examples of them trying to charge more than statutorily allowed for transfer fees, collect on wiped out liens, etc. I bet they charged the HOA general funds legal fees to file the lis pendens, and will then pay to fight it — thats the problem with attorney relationships in this case, they win by giving HOA bad advice and homeowners running the associations are typically too naive to know better.
Re: “…charge more than statutorily allowed for transfer fees…” In California, what are the statutorily allowed for transfer fees?
See Ca Civil Codes: 1368 ©: http://www.leginfo.ca.gov/cgi-bin/waisgate?WAISdocID=8584659373+2+0+0&WAISaction=retrieve 1366.1: http://www.leginfo.ca.gov/cgi-bin/waisgate?WAISdocID=85865910482+1+0+0&WAISaction=retrieve
GJ is correct, a lis pendens means “thing pending” referring to a pending action. Those do not get wiped out by the foreclosure sale. However, a lis pendens can only be recorded where title or possession is at issue (see Urez case). Back fees are simply a debto and would not affect title until they are rendered to judgment and an abstract is recorded or the CCR’s give the HOA the power to lien, in which case you would see a lien and there would be no need for a lis pendens. If you have to bring a motion to expunge, you are statutorily entitled to atty’s fees.
To more fully respond to some of the above.
I have stated some of this above:
- CC&Rs in Ca. assert that first lenders always have priority over any HOA claims and liens.
- Thaler v. Household Finance Corp.
95 Cal. Rptr. 2d 779, 80 Cal. App. 4th 1093 ?
stated that, in effect, ALL lenders have priority over any HOA liens that are filed after a loan is recorded. Before that case was published some would claim that an HOA lien actually related back to the filing of the CC&Rs. The title industry joined in asking that the case be published so they would know for certain they that HOA liens would not only be wiped out by first loans, but any loan recorded to the actual filing of the HOA lien and issue title policies accordingly.
The OP will have no trouble getting title insurance.
Sean, thanks so much for the reference on statutory amounts allowed (although I cannot open the link). I got raked over the coals on a trustee sale condo purchase where they wanted to charge me $495 for the auction purchase to ‘transfer title’ and then $495 again to sell the property to the new buyer. And then they wanted $400 for docs and some other ridiculous fees on the sale transaction.
OK, read the civil code and it just states that the association cannot charge more than their cost to make transfers. Unfortunately, that leaves it up to interpretation. I tried to argue the $495 transfer fee because there was no escrow involved, no documents required. All I wanted to do was create a new account with my ownership so that I could start paying the current assessments. I said 'How much time does it take to go into the computer and change the name on the account?" and they got all huffy and said it was a huge amount of work and they would not waive the fee. This was, of course, a 3rd party management company who makes their money off these exorbiant fees.
Yes, it is a Lis Pendens. I got a copy of the compliant from the Rancho Cucamonga court;. They wanted to foreclose for deliquent assessments. The management company for the HOA did send me a clear account, however, since it was a Lis Pendens and not a lien for delinquent assessments, my title company withheld some of my proceeds until I get it expunged. While I was the owner of the home, I went to a board meeting and the community manager for the management company made a comment to the board that if they release the Lis Pendens then they would have to pay the attorney fees. The board and/or attorney doesn’t want to be on the hook for their mistake and have to pay/eat their fees.
Hire an attorney and have it expunged at their expense… based on my read the law is clear that loser pays attorney fees. I’d still have the attorney start with a letter to the board and attorney. They clearly screwed up, and it would be better for them to back down now rather than incur more fees.