Trustee Sales vs. Lien by HOA


#1

I work for a HOA. We have a property that currently has a Lien placed on it and are trying to collect the money owed. In 2011 the property became delinquent. In January 2012 the property was “ready to sell” as stated by the Trustee holder (Recontrust) in California. Recontrust stated that the sale date was “pushed out” past January 2012. In September 2012 the HOA placed a Lien against the property for back dues not aware at that time that the property had possibly gone into foreclosure. The sale date of the property did not happen until November 2012 and was recorded with our county in December 2012. The amount of the final sale was about $1000,000 less than unpaid debt. During the entire foreclosure process and Trustee sale we were not notified of the process taking place. We also believe that the foreclosure was not noticed in our local paper. We are now trying to decide what course of action to take as we believe that the proper steps were not taken by BOA and Recontrust. Can we act on this and if so who should we contact and who is responsible for paying back the debt??


#2

? ? ? Lots of HOAs (pardon my blunt language) wasted thousands of dollars pursuing noncollectable debts after the crash. ?Whoever was handling your collections made piles of dollars knowing you’d never collect a dime. ?It was obvious to all concerned that the loan on the property was probably at least twice (in many times 3 times) the value of the property. ?You didn’t have to be notified of the pending foreclosure sale because you had nothing of record at the time the NOD was filed. ?You said your lien recorded only 2 months before the B of A finally took title. ? What makes you think it wasn’t published? ? ?From your post, we can assume all the proper recordings took place. ? You didn’t?allege they didn’t post. ? (Every posting service takes a picture.) ?Postings are immediately taken down by the owner if he/she is still there.?

? ? ? Even assuming the Notice didn’t publish and you want to pay the thousands to an atty. to set the sale aside, you would then need to be prepared to payoff the loan - which is more than the property is worth!!! ? ?Many banks, especially when condos were involved, delayed foreclosing for 2 or 3 years - like in this case. ? Once they take title they are then responsible for HOA dues and have the liability of owner a property they didn’t want to deal with. ?There are many SFRs, as well, that are sitting vacant where lenders aren’t ready to deal with. ??

? ?


#3

I ran out of space, above YOU HAVE NO CASE. If you get talked into spending money with an atty. - the HOA board is not acting properly. Your atty. should tell you this. HOA liens are JUNIOR to all senior liens - meaning they only have the right to payoff the senior lien if they want to protect themselves. One point - in the rare instance the homeowner didn’t file Bankruptcy and is collectible, you can sue him in Court and get a judgment.


#4

I agree the points Miketh made in his responses. I strongly suspect BoA/Reconstruct complied with their filing/posting requirements before the trustee sale. In virtually all instance the HOA is a junior lien-holder position vs open loans (DOTs), and the back-due HOA fees are “wiped out” to the new owner (post foreclosure). Henceforward, the new owner must pay the ongoing HOA dues or risk foreclosure. I have seen a few instances when the HOA will foreclose ahead of a lender with the HOA having no intention of paying off the open senior loans. The HOA thereby forces the homeowner to “redeem” (pay the back due HOA amount in full within 90 days) or lose ownership/control of the property. I have seen several instances where a homeowner was renting their property and generating lucrative cash-flow (since they weren’t paying their mortgage) and the homeowner weighed the cost/bene of redeeming vs “letting the property go” and opted to redeem. In one case the homeowner was getting $4K to 6K per month on VRBO for his resort property. The HOA foreclosed (Lien/NOD/NTS/Trustee Sale) on $10K in back due fees … homeowner redeemed and kept renting it out for another 2yrs before the 1st DOT ultimately foreclosed and ended the game. So redemption worked for both the homeowner (pocketed more rent) and the HOA (got their back due fees paid).