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HOA lien on a bank owned property

Information Technology

CA

July 09, 2009

My neighbor recently purchased a banked owned property in Coloroado that has a 7k hoa lien on it. Normally what happens in this situation? Does the bank pay the lien, does the hoa forgive the debt, or is the seller responsible for the amount.

Licensed Real Estate Broker

New York, NY

July 09, 2009

Brian Lange asked "My neighbor recently purchased a banked owned property in Colorado that has a 7k hoa lien on it. Normally what happens in this situation? Does the bank pay the lien, does the hoa forgive the debt, or is the seller responsible for the amount. "

Brian,

Check the title insurance policy. If it is not an exception to title on Schedule B of the policy, then file a claim with the title insurance company. If it is an exception, than your neighbor bought the condo subject to the lien and would now be responsible for paying it as the new owner.

Michael Richman, MUP, MBA
Graduate Realtor Institute, Instructor Training Institute, Seniors Real Estate Specialist, e-Pro, Certified Buyer Rep
Licensed Real Estate Broker
Herndon Eagleton Real Estate - Here For You
450 7th Avenue, Suite 948 New York, NY 10123
Phone 917-991-2528
mrichman@HerndonEagleton.com
http://www.HerndonEagleton.com

Information Technology

CA

July 09, 2009

Thanks Michael. Very helpful information.

Licensed Real Estate Broker

New York, NY

July 09, 2009

Brian,

Glad to be of service. Let me know how it turns out.

Michael Richman, MUP, MBA
GRI, ITI, SRES, e-Pro, CBR
Licensed Real Estate Broker
Herndon Eagleton Real Estate - Here For You
450 7th Avenue, Suite 948 New York, NY 10123
Phone 917-991-2528
mrichman@HerndonEagleton.com
http://www.HerndonEagleton.com

Licensed Real Estate Broker

Albuquerque, NM

July 10, 2009

Brian,

When you say "purchased" do you mean he has the property "under contract" or has he already closed? I assume he purchased from the Bank? Or did he purchase at the foreclosure auction?

HOA fees past due and that create liens on a property should be paid by the Seller in order to issue clear title. An owner's title policy should be issued at closing, and would cover recorded liens. This is also true even when the seller is a bank or mortgage company. Often HOA fees accrued prior to the foreclosure sale are eliminated through the foreclosure action itself.

If your neighbor already owns the property, and there is still a HOA lien on it he may be stuck with that debt. In closing a purchase from the Bank, the Buyer usually releases the Bank form any liability on unrecorded liens. There are quite a few variables, and "the devil is in the details".


Matt Peters, Albuquerque-Rio Rancho, NM Matt@REALTOR.com
(505) 269-4791 . . . . Your Direct Line to RESULTS
www.IdealNM.com www.Relocation2Albuquerque.com

If, however, your

Licensed Real Estate Broker

Portland, OR

July 10, 2009

You need to check the state's laws. Some states have so-called "super-lien" laws, where HOA assessments remain on a house after foreclosure and are not wiped out as are other junior liens.

If that's the case, it will have to be paid by a new owner. The theory, as I understand it, is that HOA assessments benefit the property, not the person, so they are remain on the house. The flip side of this would be that any HOA refunds would be made to te present owner of the house.

Licensed Real Estate Broker

Portland, OR

July 10, 2009

Point of clarification: The HOA lien will have to be paid by someone, and not necessarily the new buyer. It's more likely the seller, who appears to be the lender, may have to pay.

Licensed Real Estate Agent

St. Albans, VT

July 11, 2009

If your neighbor already owns the property, and there is still a HOA lien on it he may be stuck with that debt. In closing a purchase from the Bank, the Buyer usually releases the Bank form any liability on unrecorded liens. There are quite a few variables, and "the devil is in the details".

Assuming your neighbor's attorney did his job in searching the deed prior to closing this lien should have been uncovered. Go back to the attorney and bring this up and ask the question "where was this lien filed and when and why did you not know about it". If it was not filed properly (timely) their may not be any liability. Not a good way to start in the association for either side.

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